NNPC confirms return of fuel subsidy, experts demand transparency

petrol pump

NNPC confirms return of fuel subsidy, experts demand transparency

Despite initial denials, the Nigerian National Petroleum Company Limited (NNPCL) says the Federal Government is subsidising the pump price of Premium Motor Spirit (PMS), also known as petrol.

It said in a new report that President Bola Tinubu approved the request of the company to use its 2023 dividends due to the federation to pay for petrol subsidy.

The President was also said to have approved the suspension of the payment of the 2024 interim dividends to the federation in order to augment the NNPCL’s cash flow.

Tinubu announced the removal of fuel subsidy during his inaugural address on May 29, 2023.

Many analysts had argued that the government must have restored petrol subsidy with the landing cost at over N1,200/litre and pump price retained between M568 and N700/litre.

But the Federal Government before now consistently denied paying subsidy.

Some weeks ago, when some Nigerians hit the streets to protest hardship, one of their demands was the reinstatement of subsidy.

But in his national broadcast, Tinubu ruled out the return of subsidy, saying the decision to remove fuel subsidy as painful but necessary.

Newstrends.ng found in a report obtained by TheCable indicating that the President had given the NNPCL his approval to use its 2023 dividends to pay for petrol subsidy.

According to the 2023 Audited Financial Statement (AFS) of the national oil company, a net profit of N3.297tn was declared at the close of the financial year which ended in December, 2023, an increase of over N700bn (28 per cent) when compared to the 2022 profit of N2.548tn.

The NNPCL shareholders also approved a final dividend of N2.1trn in line with the Petroleum Industry Act (PIA) 2021 provisions.

Analysts react

An economic analyst, Dr Muda Yusuf, said that the government was only being “socially sensitive” by retaining subsidy payment.

Yusuf, who is the chief executive officer of Centre for the Promotion of Private Enterprise (CPPE), however, called for transparency and openness in the management of the payment.

He said, “I think the government is just being pragmatic; they are just being realistic and they are just being socially sensitive. That is why the price of fuel has remained at around N600, N650, N700.

“If the government had yielded to this argument that there should be no more subsidy, fuel price should have gone to around N1,200, N1,300. And how will the citizens feel?

“So, for the government to be able to show that it is sensitive, it has to continue to provide it until we are able to refine domestically.

“If we begin to refine domestically either through Dangote or through the government-owned refineries, the level of subsidy may drop but it will not completely disappear.

“It is a major dilemma because if you withdraw the subsidy, the citizens will begin to cry out. If you retain the subsidy, you would incur a lot of costs.”