NNPCL Admits Government is Subsidising Petrol Sales Amidst Denial of Direct Payments

The Nigerian National Petroleum Company Limited (NNPCL) has acknowledged that the Federal Government is effectively subsidising petrol by allowing it to be sold below the landing cost, despite its previous denials of paying direct subsidies to marketers.

In a statement made on Monday in Abuja, Alhaji Umar Ajiya, NNPCL’s Chief Financial Officer, clarified the situation, explaining that while no subsidies have been paid to marketers in the last nine months, the government’s pricing policy constitutes an indirect subsidy.

“Over the past eight to nine months, NNPCL has not paid a single kobo to any marketer under the guise of a subsidy. What has been happening is that we have been importing petrol, which lands at a specific cost price, but the government directs us to sell it at half that price. The difference between the landing price and the selling price is a shortfall, which is a matter of reconciliation between the Federation and NNPCL,” Ajiya stated.

This arrangement, according to Ajiya, means there is no direct exchange of subsidy payments with marketers. Instead, the government’s intervention in pricing ensures that the burden of the cost difference is absorbed, albeit indirectly, by the state.

The NNPCL’s approach to handling petrol imports also includes maintaining credit lines with suppliers, a common practice in global commercial systems. Dapo Segun, the company’s Executive Vice President for Downstream, highlighted the significance of these open credit agreements as a testament to the NNPCL’s credibility in the international market.

“Regarding the outstanding amounts to suppliers, the figures being circulated are exaggerated; the actual debt is much lower than the $6.8 billion being suggested,” Segun said. He emphasised that the relationship between NNPCL and its suppliers is key to ensuring continuous fuel supply across the country, noting that the balance owed fluctuates as payments are made and new supplies are received.

This revelation comes amid ongoing fuel scarcity in Nigeria, which has intensified public scrutiny of the government’s role in managing fuel imports and pricing. While the Federal Government has repeatedly denied paying subsidies, the major marketers argue that the true landing cost of petrol exceeds N1,000 per litre, far above the price at which it is sold to consumers.

As the sole importer of petrol, NNPCL’s operations are closely tied to government policy, and the current pricing strategy has raised concerns about the sustainability of fuel supply under the existing framework. Industry experts and stakeholders are increasingly calling for an end to fuel importation and a transition to domestic refining to stabilise supply and pricing.

The ongoing debate underscores the complex dynamics of Nigeria’s energy sector, where government intervention continues to play a pivotal role in managing both the economic and social implications of fuel pricing. As the situation develops, it remains to be seen how the government will address