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The Nigerian National Petroleum Company (NNPC) Ltd has clarified that it is currently selling petrol (Premium Motor Spirit, PMS) at only half of its landing cost.
Speaking in Abuja on Monday, NNPC’s Chief Financial Officer, Umar Ajiya, emphasized that the company is covering what he termed as a “shortfall” rather than offering a subsidy.
The Nigerian National Petroleum Company (NNPC) Ltd has clarified that it is currently selling petrol (Premium Motor Spirit, PMS) at only half of its landing cost.
Speaking in Abuja on Monday, NNPC’s Chief Financial Officer, Umar Ajiya, emphasized that the company is covering what he termed as a “shortfall” rather than offering a subsidy.
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Ajiya revealed that while the official pump price of petrol is around ₦600 per litre, the actual landing cost is closer to ₦1,200 per litre.
He confirmed to Bloomberg that NNPC has spent ₦7.8 trillion in the first seven months of 2024 to cover this shortfall.
Although subsidy typically means selling a product below cost price, Ajiya was keen to distinguish this situation from a traditional subsidy.
Despite internal communications between NNPC and the presidency—seen by TheCable—using the term “subsidy” to describe the shortfall, Ajiya denied that NNPC is engaged in subsidizing petrol during a media briefing on the company’s 2023 audited financial statements.
He stated that NNPC is merely managing the difference between the landing cost and the selling price in coordination with the Federation.
Ajiya further clarified that no payments have been made to any marketers in the last eight to nine months under the guise of a subsidy.
He explained, “In the last eight to nine months, NNPC Ltd. has not paid anybody a dime as a subsidy; no one has been paid kobo by NNPC Ltd. in the name of subsidy.
“No marketer has received any money from us by way of subsidy.
“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price.
“So the difference between the landing price and that half price is a shortfall.
“And the deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”
Naija News understands that Ajiya did not address how much of the $4.9 billion covering the shortfall could have gone into the federation account if not for these payments.
It is speculated that the All Progressives Congress (APC) government is avoiding the term “subsidy” due to the negative connotations associated with it, especially since the “subsidy scam” was a major issue during its campaign to unseat the Peoples Democratic Party (PDP) in 2015.
