NNPC INCURS N5.4BN AS FUEL SUBSIDY RETURNS
Subsidy on Premium Motor Spirit (PMS), also known as petrol, has resurfaced, as the Nigerian National Petroleum Corporation (NNPC), said over the weekend, that it incurred N5.35 billion as subsidy in June 2020.
Subsidy occurs when the pump price of petrol is lower than the actual cost price of the commodity. In this case, NNPC through its subsidiary, NNPC retail or through oil marketers, dispense the product to motorists at a particular price, which is lower than the cost of the product and pay itself subsidy to cover up the loss.
In its Monthly Financial and Operation Reports for June 2020, released over the weekend, the NNPC said it had recorded zero subsidy payments in April and May 2020, after it had recorded subsidy of N43.31billion, N20.68 billion and N37.66 billion in January, February and March 2020 respectively.
The confusion aroused from the fact that the Minister Of State For Petroleum Resources, Chief Timipre Sylva, had few weeks backs, said that the Federal Government had deregulated the downstream petroleum sector since March 2020, thereby relieving the government of the burden of fuel subsidy and giving oil marketers the freedom to determine fuel price, with guidance from the Petroleum Products Pricing And Regulatory Agency (PPPRA).
Also, Group Managing Director of the NNPC, Mallam Mele Kyari, had in April 2020 declared that the fuel subsidy was gone forever, adding that moving forward, market forces would be responsible for determining the price of the commodity.
Group Manager, Group Public Affairs Division of the NNPC, Dr. Kennie Obateru, when contacted, said: “The subsidy in the report represents payment for stock held by marketers at the onset of the removal of subsidy by the Federal Government. Since the subsidy removal started with reduction in pump price, marketers have to be paid the differential of the PPPRA verified stock they held and it spread over a period of six months”.