President Bola Tinubu has announced the end of petrol subsidy in Nigeria, a move that has been welcomed by the Nigerian National Petroleum Company Limited (NNPC).
The NNPC Group Chief Executive Officer, Mele Kyari, said the subsidy was unsustainable and had drained the company’s cash flow.
He said the Federal Government owed the NNPC N2.8tn for the subsidy payments it had made on behalf of the government.
Kyari spoke to State House Correspondents on Tuesday after meeting with Tinubu at the Presidential Villa, Abuja.
He said the President had confirmed that the 2023 appropriation act did not provide for petrol subsidy beyond June, which was the deadline for the 18-month extension period approved by the previous administration.
He said the NNPC had been funding the subsidy from its net revenue after paying taxes and royalties to the government.
He said this had affected the company’s ability to invest in its core businesses and meet its obligations.
He said “We have not received any payment whatsoever from the Federation since the provision of N6tn in 2022 and N3.7tn in 2023 for subsidy.
“That means they (Federal Government) are unable to pay and we have continued to support this subsidy from the cash flow of the NNPC. That is, when we net off our fiscal obligations of taxes and royalty, there’s still a balance that we’re funding from our cash flow. And that has become very, very difficult and affecting our other operations.
“We’re not able to keep some of these cash for invest on our core businesses. And the end result is that it can be a huge challenge for the company and we have highlighted this severally to government that they must compensate and NNPC they must pay back an NNPC for the money that we have spent on the subsidy.”
Kyari said the country could not afford to continue with the subsidy regime and urged the government to settle its debt to the NNPC.
He said “Today, we are waiting for them to settle up to N2.8tn of NNPC’s cash flow from the subsidy regime and we can’t continue to build this.”
He said the recent petrol queues across the country were caused by panic buying and uncertainty over the President’s statement that “subsidy is gone.”
He assured Nigerians that the government would take measures to cushion the impact of the subsidy removal.
He was accompanied by the Chief Executive Officer of Nigerian Mainstream and Downstream Regulatory Authority, Faruk Ahmed, who said there would be no price cap on petrol products in the country.
More details to come…
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