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EXCLUSIVE: Petrol subsidy gulps N210bn as NNPC records ZERO remittance to FAAC

EXCLUSIVE: Petrol subsidy gulps N210bn as NNPC records ZERO remittance to FAAC
February 25
09:09 2022

The Nigerian National Petroleum Company (NNPC) Limited says it expended N210.38 billion on petrol subsidy in January 2022.

Subsidy or under-recovery is the underpriced sales of premium motor spirit (PMS), better known as petrol.

NNPC said this in its monthly presentation to the Federation Account Allocation Committee (FAAC) meeting concluded on Thursday, February 24.

Last month, NNPC deducted N270 billion for December’s 2021 under-recovery, amounting to N1.43 trillion in the year. This action depleted revenue accrued to the federation account to N542 billion from a projected N2.51 trillion.

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According to the latest document, obtained by TheCable, the shortfall included a December 2021 value of PMS shortfall of N176.48 billion plus the outstanding value shortfall recovery of N33.90 billion accrued over 2021.

The oil firm said it would deduct N242.5 billion (about N143.7 billion for January 2022 recovery and November spot arrears of N98.8 billion) during next month’s FAAC meeting.

Further checks showed that NNPC did not remit any money to the FAAC for onward distribution to the federating units –- an action that may lead to state governments’ inability to pay salaries.

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It, however, recorded N383 billion as gross revenue from crude oil sales in January, a dip from the projected N414.9 billion.

TheCable understands that with the addition of N61.74 billion from tax, the federation would share a meagre N444 billion — down from N593 billion shared last month.

Most states are presently experiencing fiscal stress and kicking against deductions of the shortfall from FAAC remittances.

An ad-hoc committee of the National Economic Council (NEC) had recommended gradual deregulation of PMS prices by February 2022 to reduce the pressure of revenue accrued to states.

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In 2022, the federal government may spend up to N3 trillion to settle the PMS shortfall.

Last week, President Muhammadu Buhari asked the national assembly to approve the N2.557 trillion budget for petrol subsidy in 2022.

The allocation was not catered for in the signed 2022 budget due to the deregulation policy of the Petroleum Industry Act.

With the new provision, the government had also proposed an 18-month extension for the implementation of the petroleum law.

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