The federal government owes the Nigerian National Petroleum Company Limited (NNPCL) a deficit of N2.8 trillion in subsidy payments, according to Mele Kyari, group chief executive officer (GCEO) of the company.
After meeting with President Bola Tinubu, Kyari made this statement to State House reporters at the Presidential Villa in Abuja. He said that he was quite pleased that President Tinubu had mentioned the end of the subsidy regime in his inaugural speech because subsidies are no longer viable.
Farouk Ahmed, the Chief Executive Officer of the Nigerian Mainstream and Downstream Petroleum Regulatory Authority (NMDPRA), joined Kyari at the briefing. Farouk Ahmed lamented that the NNPCL is unable to raise money for its core businesses due to the high subsidy burden.
He noted that it was understandable why gas lines started to form again around the nation on Monday because marketers wanted to know what the president meant when he said that “subsidy is gone.”
He claimed that people rushed to buy the product as a consequence of the uncertainty surrounding the statement, which contributed to the queues witnessed at petrol stations. He also promised that the government would take action to mitigate the effects of the loss of the subsidy.
In his words:
“Since the provision of the N6 trillion in 2022 and the N3.7 trillion in 2023, we have not received any payment whatsoever from the Federation.
“That means they (the Federal Government) are unable to pay, and we’ve continued to support this subsidy from the cash flow of the NNPC. That is, when we net off our fiscal obligations of taxes and royalty, there’s still a balance that we’re funding from our cash flow, and that has become very difficult and is affecting our other operations.
“We’re not able to keep some of this cash for investment in our core businesses, and the end result is that it can be a huge challenge for the company; we have highlighted this several times to the government that they must compensate, and NNPC must pay back the NNPC for the money that we have spent on the subsidy.
“So today the country doesn’t have the money to pay for subsidies. There’s an incremental value that will come from it. But it is not an issue of whether you can do it or not because today we can’t afford it and they are not able to pay our bill. That comes down to how much the federation owes the NNPC now.
“Today, we are waiting for them to settle up to N2.8 trillion of NNPC’s cash flow from the subsidy regime, and we can’t continue to build this.”
