Federal Government owes the Nigerian National Petroleum Company Limited, NNPCL, almost half of what it plans to collect in revenues this year for the petrol subsidy it reintroduced in August last year, Bloomberg reported.
The report stated that NNPC is owed N7.8tn ($4.9bn) by the government in subsidy debts for the seven months to July, citing NNPC’s Chief Financial Officer Umar Ajiya. The government aims to collect N19.4tn in revenue this year.
The subsidy that was withdrawn in May last year by Nigeria’s President Bola Tinubu to help repair the state’s finances after debt-service costs jumped to 96% of revenues was reinstated to allow measures to be introduced that could cushion Nigerians from spiraling inflation that’s at 33 per cent.
The government will allow NNPC to offset about N2.2tn it owes the state against the subsidy debt, Ajiya said in an interview after the company announced its results in Abuja, the capital, according to Bloomberg.
The government accumulated the debt to the NNPC because it is the sole importer of petrol, which it resells to marketers at below-market cost to keep prices low.
A litre of petrol sells for about N617 at the pump at NNPC retail stations in Abuja, compared with more than the N1,000 price in other locations, fueling cross-border smuggling of the product.
The state oil company recorded an annual profit of N3.3tn in 2023, compared with N2.55tn a year earlier. It plans to invest $6.6bn in its operations this year, which will be largely borrowed, Ajiya said.
It foresees crude and condensates production increasing to two million barrels a day by year-end from an average of 1.75 million barrels per day in August, helped by improved security to combat oil theft.
