Alhaji Umar Ajiya, the Chief Financial Officer (CFO) of the Nigeria National Petroleum Company Ltd (NNPCL), has revealed that the federal government is compensating the company to sell Premium Motor Spirit (PMS) at half the landing cost. He described this compensation as covering the “shortfall.”
Ajiya made this statement on Monday in Abuja during the presentation of NNPCL’s 2023 full-year financial results, which showed a profit of N3.3 trillion. He emphasized that NNPCL has been solely managing the gap between the cost of importing PMS and the selling price, with no subsidies disbursed to marketers in the last nine months.
“In the last eight to nine months, NNPCL has not paid a single kobo as subsidy to anyone,” Ajiya stated. “No marketer has received any money from us under the name of subsidy. What we’ve been doing is importing PMS at a certain landing cost, and the government instructs us to sell it at half that price. The difference between the landing price and the half price is what we refer to as the shortfall. This arrangement is solely between the Federation and NNPCL, and sometimes they reimburse us, but no money is exchanged with marketers as a subsidy.”
Regarding the alleged $6.8 billion debt, Ajiya explained that credit lines are a normal practice in the downstream sector as part of the global commercial system. NNPCL had previously entered into open credit arrangements with PMS suppliers, which included term line agreements for payment.
Dapi Segun, the Executive Vice President of Downstream at NNPCL, added that establishing an open credit agreement with suppliers reflects the credibility that NNPCL has built over time. “Regarding the outstanding debt to suppliers, it is not as large as the $6.8 billion that has been reported. It is actually lower,” Segun clarified. “What truly matters is our relationship with suppliers and our commitment to making timely payments, which we have consistently done over time.”
Segun further explained that the debt figure fluctuates based on payments and supply levels, stressing that the key focus is ensuring the continuous availability of PMS across the country.
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