The Nigerian National Petroleum Company Limited (NNPCL) has confirmed that the Federal Government is subsidizing the petrol it imports into the country. Despite denying any direct payment of fuel subsidies to marketers over the past nine months, the NNPCL clarified that the government allows it to sell petrol at a price below the landing cost.
This clarification was made by the company’s Chief Financial Officer, Alhaji Umar Ajiya, on Monday in Abuja. Ajiya emphasized that while the NNPCL has not paid any marketer a kobo in the name of subsidy, the company has been handling shortfalls related to petrol importation on behalf of the federation.
“In the last eight to nine months, NNPCL has not paid anybody a dime as a subsidy; no one has been paid kobo by NNPCL in the name of subsidy. No marketer has received any money from us by way of subsidy,” Ajiya stated. He explained that the government directs NNPCL to sell petrol at half the landing cost, with the difference classified as a shortfall to be reconciled between the NNPCL and the Federation.
He further noted that credit lines are a common practice in downstream businesses globally, adding that NNPCL has maintained open credit agreements with petrol suppliers in the past through term-line contracts.
Supporting this stance, NNPCL’s Executive Vice President of Downstream, Dapo Segun, highlighted the credibility the national oil company has built with suppliers, which has enabled the establishment of open credit agreements. He refuted claims of outstanding payments reaching $6.8 billion, stating that the actual amount is lower.
“What really matters is the relationship between us and our suppliers to ensure that we keep faith in making these payments, which we have done over time,” Segun remarked. He emphasized the dynamic nature of the figures, pointing out that payments fluctuate based on ongoing transactions but ensuring continuous availability of petrol nationwide remains the priority.
The Federal Government has consistently denied paying subsidies on petrol, even as major marketers report landing costs above N1,000 per litre. As the sole importer of petrol, the Federal Government compensates NNPCL to sell fuel to Nigerians at a subsidized rate. However, this system has contributed to persistent fuel scarcity across the nation, prompting experts to call for an end to fuel importation.
