The Nigerian National Petroleum Company Limited (NNPC Ltd.) has clarified that it has not made any fuel subsidy payments in the last nine months. Alhaji Umar Ajiya, the Chief Financial Officer of NNPC Ltd., made this statement on Monday in Abuja, addressing recent speculations.
Ajiya explained that NNPC Ltd. has been managing shortfalls in the importation of Premium Motor Spirit (PMS) between the company and the federal government. He emphasized, “In the last eight to nine months, NNPC Ltd. has not paid anyone a kobo in the name of a subsidy. No marketer has received any money from us as a subsidy.”
He further elaborated that the company has been importing PMS at a certain cost price, while the government has instructed them to sell it at a reduced price. The difference between these prices, known as the shortfall, is reconciled between the Federation and NNPC Ltd., with no direct financial transactions occurring with marketers under the guise of subsidies.
Ajiya also pointed out that credit lines are a common practice in the downstream oil business globally. In the past, NNPC Ltd. had open credit agreements with PMS suppliers through term-line contracts for payment.
Dapi Segun, the Executive Vice President of Downstream at NNPC Ltd., also addressed the issue, noting that the company’s ability to establish and maintain open credit agreements with suppliers is a testament to the credibility NNPC Ltd. has built over time.
He clarified, “Regarding the outstanding amounts owed to suppliers, it is not as high as the $6.8 billion figure being circulated. The key issue is maintaining a strong relationship with our suppliers to ensure timely payments, which we have consistently done.”
Segun added that the figures involved are dynamic. “When we make payments, the outstanding balance decreases, and when new supplies are delivered, it increases. The most crucial thing is to ensure that PMS remains available across the country,” he said.
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