The Nigerian National Petroleum Corporation (NNPC) has explained why it withdrew $1.05billion from the Nigeria Liquefied Natural Gas (NLNG) dividend account, stressing that Section 7 of the NNPC Act empowers it to make such withdrawals.
The cash was used to support importation of premium motor spirit (PMS) or petrol, which is highly subsidised at the rate of N145 per litre, the current pump price in Nigeria.
According to data, petrol is supposed to be sold at a rate of at least N220 per litre but it currently sells at N145, making the price the cheapest among the countries surrounding Nigeria. Besides, while the government through the NNPC tries to make this fuel affordable and available to Nigerians by paying the under-recoveries, some people engage in illegal diversion of the fuel to neighbouring countries where they sell it at a premium. Under-recovery is the term used to describe the financial amount of subsidy the Federal Government absorbs for keeping the pump price of petrol at N145 per litre.
Also as the refineries work at very sub-optimal levels, the fuel importation level is high making the under-recovery payment huge. As a result of the low pump price of petrol, other oil marketers have shunned importation as they wouldn’t be able to recover their costs. Therefore, the onus of adequate fuel importation to meet daily national consumption falls wholly on the NNPC.
The Nation, December 27, 2018