Nigerian National Petroleum Corporation, NNPC, says Nigeria’s fuel subsidy payments shot up by 1,174 per cent in the wake of the 2019 general elections.
In a report released on Thursday, the NNPC said that it paid N206.585 billion as under-recovery in January and February 2019, an increase of N190.37 compared to N16.212 billion recorded in the last two months of 2018.
Nigeria’s 2019 general election took place, February 23 for the presidential and National Assembly elections and March 9 for the governorship and state assemblies’ elections.
Under recovery, also known as fuel subsidy is the cost the NNPC is incurring to subsidise the price of Premium Motor Spirit, PMS, also known as petrol, ensuring that it is sold at fuel retail stations at the regulated price of N145 per litre, even when the real market price is above the regulated price.
Since 2017, the NNPC had been the sole importer of PMS in Nigeria and it deducts cost for under recovery before making remittances to the Federation Account.
Ndu Ughamadu, Group General Manager, Group Public Affairs Division of the NNPC, explained that the prices of crude oil had been rising in the international market, and when that happens, it normally affects prices of petroleum products, and by extension, the landing cost.
He said, “Looking at it on a monthly basis, you would likely be speaking of spot market prices. The way these things operate, it is more of future crude oil trading. You do not know when they place
“As I said, it has to do with prices; it does not necessarily mean that once the price of crude oil was high last month that is when I bought my crude oil.
“The second reason is the issue of smuggling which we have observed over the years and NNPC have been having series of meeting with the Nigerian Customs.
“Smuggling of petroleum products across the border has affected the quantum of petroleum products being brought into the country.”
Furthermore, the report revealed that the amount recorded as subsidy by the NNPC in January and February 2019 alone, was more than the amount spent on the same item from July 2018 to November 2018, which stood at N206.3 billion. Specifically, in July, August, September, October and November 2018, the report noted that the NNPC declared under recovery of N51.2 billion, N65.9 billion, N45.8 billion, N40.5 billion and N2.9 billion respectively.
