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See the Billions of Dollars Nigeria’s Owes for Fuel Subsidy

Published by Tope Fakinlede on August 20th, 2024.

See the Billions of Dollars Nigeria’s Owes for Fuel Subsidy

NNPC

The Federal Government’s outstanding fuel subsidy debt to the Nigerian National Petroleum Company Limited (NNPC) stands at $4.9 billion (N7.8 trillion), according to a Bloomberg report on Monday. This amount represents nearly half of the government’s projected revenue for this year.

NNPC’s Chief Financial Officer, Umar Ajiya, disclosed that this debt has accumulated over the seven months leading up to July. The government anticipates generating N19.4 trillion in revenue for the year.

The fuel subsidy, initially removed in May of the previous year by President Bola Tinubu to address soaring debt-service costs—which had risen to 96% of revenue—was reinstated in August. The move aims to mitigate the impact of high inflation, which is currently at 33%.

To address the debt, the government plans to allow NNPC to offset approximately N2.2 trillion against the subsidy debt, Ajiya mentioned during a results announcement in Abuja. The debt arose because NNPC, as the sole importer of petrol, sells it to marketers below market value to keep consumer prices low.

Currently, petrol is priced at about N617 per litre at NNPC stations in Abuja, significantly lower than the over N1,000 per litre in other regions, which has led to smuggling across borders.

In 2023, NNPC reported an annual profit of N3.3 trillion, up from N2.55 trillion the previous year. The company plans to invest $6.6 billion in its operations this year, primarily through borrowing. NNPC expects to increase its crude and condensate production to two million barrels per day by the end of the year, up from an average of 1.75 million barrels per day in August, thanks to enhanced security measures against oil theft.