Nigeria’s NNPC limited led by the former president Muhammadu Buhari spent 4.39 trillion naira ($9.7 billion) on a petrol subsidy last year, latest data from the state-owned firm showed on Friday, a cost the government has blamed for dwindling public finances.
NNPC did not remit funds to federal accounts last year, its data showed, leaving a hole in public finances at a time when the government has been warning that low revenues and large deficits left it unable to stimulate the economy.
The NNPC and the Minister of finance said to borrow to and pay interest on the loan for fuel subsidy, Affirming the President’s stance, Kyari argued that the subsidy payment is no longer tenable as it makes it difficult for the company to fund its core businesses.
He said “Since the provision of the N6tn in 2022, and N3.7tn in 2023, we have not have not received any payment whatsoever from the Federation.
“That means they (Federal Government) are unable to pay and we’ve continued to support this subsidy from the cash flow of the NNPC. That is, when we net off our fiscal obligations of taxes and royalty, there’s still a balance that we’re funding from our cash flow. And that has become very, very difficult and affecting our other operations.
Successive governments in Nigeria have tried and failed to remove or cut the subsidy, a politically sensitive issue in the country of 200 million people.
Nigeria imports nearly all its refined fuels because local refineries were shut due to years of neglect.
Oil production, which has started to recover, has been throttled by crude theft and pipeline vandalism, which means Nigeria is spending more on fuel imports than it is getting from crude oil production.
Finance minister Zainab Ahmed has said the country will keep its costly but popular petrol subsidy until mid-2023 and set aside 3.36 trillion naira ($7.5 bln) to spend on it.
($1 = 453.09 naira) Reuters