Page 11 - AfrOil Week 18 2021

AfrOil POLICY AfrOil

NNPC says it is unable to pay

into fuel subsidy fund in May

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

Nigeria urged to develop tar sands

NIGERIA NIGERIA’S Minister of Science and Technology Speaking during a virtual conference organ-
Ogbonnaya Onu said last week that the coun- ised by the Nigeria Building and Road Research
try ought to consider taking steps to develop Institute (NBRRI), Onu reported that the West
its own unconventional hydrocarbon reserves, African state’s tar sands contained at least 42bn
especially its tar sands. barrels of ultra-heavy crude oil.

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