NNPC Confirms N7.8 Trillion Subsidy Debt After Initial Denials

Nigerian National Petroleum Company (NNPC) Limited has confirmed that the federal government owes it a staggering N7.8 trillion for petrol subsidies. This disclosure comes after the company initially denied the existence of any petrol subsidy.

On Monday, the NNPC had publicly refuted reports of a petrol subsidy. However, Umar Ajiya, the company’s Chief Financial Officer, revealed during a media briefing on the 2023 audited financial statements in Abuja that the NNPC had been managing the shortfall between petrol importation costs and the federation’s contributions.

In a subsequent statement to Bloomberg, Ajiya confirmed that the NNPC is owed N7.8 trillion ($4.9 billion) by the government for subsidy payments covering January to July. He indicated that the government would allow the NNPC to offset about N2.2 trillion of its existing debt against this subsidy debt.

The revelation contrasts sharply with earlier denials. In June, fiscal policy documents citing a N5.4 trillion petrol subsidy provision for 2023 were circulated. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, dismissed these documents as not approved by the government.

Further complicating the situation, on August 15, 2023, reports emerged that President Bola Tinubu was considering a temporary subsidy due to fluctuating crude oil prices and foreign exchange rates. Nonetheless, Ajuri Ngelale, the presidential spokesperson, denied any reintroduction of the subsidy.

Earlier in the year, NNPC had also denied the reimplementation of petrol subsidies, claiming they had been completely removed. This stance was contradicted by Nasir el-Rufai, former governor of Kaduna State, who stated in April that the federal government was spending more on petrol subsidies than before. Additionally, Gabriel Ogbechie, CEO of Rainoil Limited, claimed the government’s monthly expenditure on petrol subsidies had surged to N600 billion.

This recent confirmation by the NNPC raises new questions about the federal government’s fiscal policies and transparency regarding subsidy payments.