N400bn monthly fuel subsidy draining NNPC resources – GMD Kyari

• Nigeria set to meet 1.8mbpd OPEC quota

Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, says the N400 billion fuel subsidy payment made by the NNPCL on a monthly basis is draining the company’s resources.

He made this known on Friday during the Official Cutover ceremony transforming the NNPC to the NNPCL in Abuja.

Kyari was quoted as saying, “Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly PMS imports into our country. In current data terms, three days ago, the landing cost was around N315/liter.
“Our customers are here; we are transferring to each of them at N113/litre. That means there is a difference of close to N202 for every liter of PMS we import into this country. In computation, N202 multiplied by 66.5 million liters, multiplied by 30 will give you over N400 billion of subsidy every month.
“But there is a budget provision for it (subsidy). Our country has decided to do this. So, we are happy to deliver this, but it is also a drain on our cash flow, and I must emphasize this.
“For as we continue to support this, you will agree with me that it will be extremely challenging for us to continue to fund this from the cash flow of the company when you do not get refunds from the Ministry of Finance.”
Giving a valid reason to end fuel subsidies, Kyari on February 7, told Channels TV that as the sole importer of petroleum products into the country, the NNPCL should receive monthly allowances from the Ministry of Finance in order to finance fuel subsidies.

But he was not sure if this could be possible amid the country’s current fiscal realities.

The Federal Government said it would remove fuel subsidies by June 2023, so, that the country could increase its revenues.

For many years, the government has been spending huge funds on fuel subsidies.

Meanwhile, the NNPCL GMD has said that the country is on its way to producing 1.8 million barrels per day of crude oil, which is its assigned quota by the Organization of Petroleum Exporting Countries (OPEC).

While speaking during the event, Kyari emphasized that the rise in crude production was not rocket science. He said :

“As of yesterday, we have crossed 1.6 million barrels per day, this is not rocket science. We have a line of sight to recovery to the quota level of 1.8 million barrels per day. I know that it is not far away probably two to three months maximum, but we will be there and that will bring back partners to invest, return the confidence of our investors and ultimately bring back growth.”