NNPC Clarifies Selling Petrol at Half Landing Cost, Denies Subsidy Claims

The Nigerian National Petroleum Company (NNPC) Ltd has clarified that it is currently selling petrol (Premium Motor Spirit, PMS) at only half of its landing cost.

Speaking in Abuja on Monday, NNPC’s Chief Financial Officer, Umar Ajiya, emphasized that the company is covering what he described as a “shortfall” rather than providing a traditional subsidy.

Ajiya revealed that while the official pump price of petrol is approximately ₦600 per litre, the actual landing cost is closer to ₦1,200 per litre.

He confirmed to *Bloomberg* that NNPC has spent ₦7.8 trillion in the first seven months of 2024 to cover this shortfall.

Although the term “subsidy” has been used in internal communications between NNPC and the presidency—documents seen by *TheCable*—Ajiya was keen to differentiate this situation from a typical subsidy during a media briefing on the company’s 2023 audited financial statements.

He explained that NNPC is simply managing the difference between the landing cost and the selling price in coordination with the Federation.

Ajiya further clarified that no payments have been made to any marketers in the last eight to nine months under the guise of a subsidy.

He stated, “In the last eight to nine months, NNPC Ltd. has not paid anybody a dime as a subsidy; no one has been paid kobo by NNPC Ltd. in the name of subsidy.

“No marketer has received any money from us by way of subsidy.

“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price.

“So the difference between the landing price and that half price is a shortfall.

“And the deal is between the Federation and NNPC Ltd., to reconcile; sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”

It is unclear how much of the $4.9 billion covering the shortfall could have been allocated to the federation account if not for these payments.

Speculation suggests that the All Progressives Congress (APC) government may be avoiding the term “subsidy” due to its negative connotations, especially since the “subsidy scam” was a significant issue during its campaign to unseat the Peoples Democratic Party (PDP) in 2015.