Page 10 - AfrElec Week 18 2021

AfrElec FUELS AfrElec

NNPC says it is unable to pay

into fuel subsidy fund in May

NIGERIA NIGERIAN National Petroleum Corp. (NNPC) have not yet been concluded, he said, NNPC
has said it will not be able to make any payments has no choice but to deduct nearly NGN112bn
into the federal account used to subsidise domes- ($294.3mn) from its next transfer of oil and gas
tic fuel prices in the month of May. earnings from April 2021 into the relevant fed-
Local press agencies reported last week that eral account.
NNPC had made an announcement to this effect “[The] AGF is invited to note that the sum
in a letter addressed to Ahmed Idris, Nigeria’s of NGN111,966,456,903.74 [about $294.26mn]
federal accountant-general, in late April. Accord- will be deducted from April 2021 oil and gas pro-
ing to the agencies, the document was also sent ceeds due to the Federation in May 2021, which
to Minister of Finance, Budget and National will translate to zero remittance to the Federation
Planning Zainab Ahmed, as well as Ashisana Account from NNPC in the month of May 2021,”
Okauru, the director-general of the Nigeria Gov- he wrote.
ernors’ Forum, and David Olofu, the chairman NNPC’s announcement has raised concerns
of Nigeria’s Forum for Commissioner of Finance. in Nigeria, as it will affect the amount of oil and
In the letter, NNPC’s CFO Umar Isa explained gas revenue that the federal government shares
that the company was not in a position to make with state and local administrations. It has also
the usual payments into the account because it led some observers in Nigeria to speculate that
had not been able to cover the gap between land- the national oil company (NOC) is in dire finan-
ing costs and ex-coastal prices for gasoline in cial straits.
February of this year. This had led to a shortfall The firm has sought to downplay this talk,
in funding of nearly NGN112bn ($294.3mn), it though. Kennie Obateru, the group general
said. manager of NNPC’s public affairs division, said
“The Accountant General of the [Nige- in a Twitter post late last week that the payment
rian] Federation is kindly invited to note that situation was not a sign of any larger problems.
the average landing cost of Premium Motor “The shortfall will be remedied by the corpo-
Spirit (PMS) for the month of March 2021 was ration, as it relates only to the federation revenue
NGN184 [$0.48] per litre, as against the subsist- stream being managed by the NNPC and does
ing ex-coastal price of NGN128 [$0.34] per litre, not reflect the overall financial performance of
which has remained constant notwithstanding the corporation,” he wrote. “[NNPC] remains
the changes in the macroeconomic variables in positive financial trajectory for the period in
affecting petroleum products pricing,” Isa wrote. question.”
He cited ongoing discussions between the The NOC is committed to optimising its costs
government and labour organisations as a in order to maximise the sums paid into the fuel
contributor to the problem. Since these talks subidy account, Obateru added. ™

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