TheCable

The costly petroleum subsidy bill may cross N300 billion next month as the landing cost of importing fuel skyrocketed amid the Russia-Ukraine crisis.

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

The global prices of oil climbed above $100 per barrel due to disruption in global supply and potential talks on the ban of Russian oil by the European Union and the United States.

The higher the global oil prices, the more Nigeria will pay to import refined crude products — while the cost of subsidising petrol continue to erode revenue for Africa’s largest oil producer without functional refineries. 

In 2021, NNPC deducted N1.43 trillion which depleted FAAC revenue to N542 billion from a projected N2.51 trillion for the year.

In its monthly presentation to the Federation Account Allocation Committee (FAAC) meeting in February, the Nigerian National Petroleum Company (NNPC) Limited had said it would deduct N242.5 billion from the federation for subsidy at March’s meeting,

The deduction, according to NNPC, includes N143.7 billion for January 2022 recovery outstanding and November spot arrears of N98.8 billion).

TheCable also reported that NNPC did not remit any money to the FAAC for onward distribution to the federating units –- an action that may cause fiscal stress to state and local governments and cut short developmental projects.

A monthly revenue document by agencies of government obtained by TheCable on Tuesday confirmed that NNPC did not remit any funds to the federation account in January — and in February 2022.

Further details showed that value-added tax (VAT) contributed the highest to the federation purse with N177 billion. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) remitted 109 billion, FIRS (Oil tax collection) at N105.3 billion (non-oil) N90.9 billion, while customs contributed N124.2 billion. 

The document also revealed that the sum of N7.5 billion was recovered as excess bank charges for the month.

This year, the federal government has planned to spend up to N3 trillion to settle the petrol subsidy.

President Muhammadu Buhari had asked the national assembly to approve N2.557 trillion budget for petrol subsidy in 2022 — extending the implementation of deregulation policy in the landmark Petroleum Industry Act (PIA) by another 18 months.