IMF questions NNPC’s claim on 66m litres daily fuel consumption

The International Monetary Fund (IMF) has expressed doubt about the reported volumes of fuel consumed in Nigeria.

The Nigerian National Petroleum Company (NNPC) Limited has consistently maintained the claim on the 66 million daily fuel consumption in the country despite criticism from the citizens.

In its 2022 Article 1V mission in Nigeria published on Friday, the IMF stressed that the figure was denying government revenue from oil sales and putting more pressure on Africa’s largest economy.

The Bretton Woods Institution acknowledged efforts by the Nigerian authorities to publish the annual financial reports of the NNPC since 2019.

It also expressed concern about the nature of tax write-offs reported yearly by NNPC.

The statement read: “ The mission recommended a closer look at the nature of NNPC’s financial commitments to the government and the costing details of the fuel subsidy, including through a financial audit.

“Stronger cash management and better coordination among key public institutions is needed to increase the realism of budgetary forecasts and reduce reliance on central bank overdrafts.”

The Fund expressed concern that the NNPC’s financial opaqueness was coming at a time when public finance has been under stress with elevated fiscal deficits.

READ ALSO: Customs faults NNPC’s data on subsidy payments, daily fuel consumption

The Federal Government’s fiscal deficit was projected to widen to 6.2 percent of Gross Domestic Product (GDP) in 2022, mainly due to fuel subsidy costs despite higher non-oil revenues relative to 2021.

And without bolder revenue mobilization efforts, the IMF projected that costly fuel subsidies and rising debt servicing costs would keep overall fiscal deficits above 6 percent of GDP in the medium term, raising public debt to as high as 43 percent of GDP by 2027.

According to data from the Debt Management Office, Nigeria’s debt to GDP hovers around 20.3 percent and according to authorities, this is sustainable.

The Fund added: “While still deemed sustainable, such a level of debt is projected to take up nearly half of General Government (GG) revenues in interest payments, making the fiscal position highly vulnerable to real interest rate shocks.

“It also leaves little fiscal room for vital social spending on education and health, where Nigeria fares poorly compared to peer countries in sub-Saharan Africa (SSA).”

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