NNPC can’t continue paying petrol price differential without going bankrupt- Presidency

NNPC can’t continue paying petrol price differential without going bankrupt- Presidency

Bayo Onanuga, special adviser on information and strategy to
President Bola Tinubu, says the Nigerian National Petroleum Company (NNPC)
Limited admitted to having financial constraints because it can no longer
subsidise petrol.

 

In an X post on Tuesday, Onanuga said if NNPC continues to
pay the differences in landing cost and petrol price, the national oil company
will go bankrupt.

 

Earlier today, NNPC increased the price of petrol to N855
per litre. However, the premium motor spirit (PMS) landing cost is around
N1,200.

 

On Sunday, reports showed that the lingering petrol scarcity
in many parts of the country was worsened by a $6 billion debt NNPC owed
suppliers

 

Hours later, NNPC admitted to owing suppliers of premium
motor spirit (PMS), also known as petrol, adding that it was facing financial
strain due to the petrol supply costs, and this is affecting the company’s
ability to sustain PMS supply.

 

Prior to acknowledging the debt, NNPC had denied subsidising
petrol after TheCable reported that the president approved a request by the
company to utilise the 2023 final dividends due the federation to pay for the
subsidy.

 

Speaking on the subsidy and the impact on NNPC’s finances,
Onanuga said NNPC’s debt was a result of the company’s efforts to absorb rising
petrol costs and protect Nigerian consumers, rather than any government
deception.

 

 “NNPC cried out
recently because it can no longer sustain the price differential on its balance
sheet without becoming insolvent,” he said.

 

“The situation has greater implications for the ability of
the three tiers of government to function as the  NNPC has failed to pay into the Federation
Account, the money that should go to the government.

 

“There are no easy choices. Something must be done to make
NNPC survive, and keep the engines of government running and petrol flowing at
the pumps. 

 

“That is the scenario that is unfolding, and the game
changer and big relief giver may well be the Dangote refinery and other local
refineries, which will become the fuel suppliers to the local market.

 

 “When Dangote
Refinery and other refineries, including government-owned Port Harcourt
Refinery,  come fully on stream, our
country and economy will benefit on all fronts. There will be many good paying
jobs that will be created along the value chain.”

 

Also, Onanuga said there will also be a drop in the huge demand
for foreign exchange to import petroleum products.

 

‘FG NEVER LIED ABOUT
REMOVING SUBSIDY’

 

Onanuga said the federal government did not lie about the
removal of the subsidy.

 

According to the spokesperson, the federal government has
been faithful to its policy of deregulating the petroleum sector.

 

He added that the government’s decision to remove the petrol
subsidy was reflected in the 2023 supplementary budget, 2024 budget, and
amended 2024 budget, where provisions for subsidy payments were absent.

 

 “I have read a series
of articles attacking the Federal Government for not telling the truth about
fuel subsidy payments, following  NNPC
Limited’s admittance it was owing suppliers some $6 billion,” Onanuga said.

 

“Some of the stories have been written with relish, as the
authors believed they have uncovered some scoops.

 

 “The truth is that
there is no discovery. No lie uncovered. 
The government has been faithful to its policy that it was no longer
going to pay fuel subsidies since President Tinubu announced the deregulation
of the PMS sector on 29 May 2023. Since then, subsidy provisions have
disappeared from the budget.

 

“It was not in the Supplementary budget of 2023, not in the
2024 budget and the amended 2024 budget.

 

 “So the giddy
headlines about the so-called unraveling of the Tinubu government’s subsidy
payment; and return of subsidy were not justifiable.

 

“Rather what has unravelled was the commendable disposition
of the oil company owned by all the tiers of government to absorb the rising
costs of petrol at the pump and protect the Nigerian consumer.”

 

Onanuga said the generous disposition of NNPC, backed by the
president’s unwillingness to let the people suffer, has been under threat for
months, because of the rising cost of crude and the devalued naira.

Source: NNPC can’t continue paying petrol price differential without going bankrupt- Presidency

 - NigerianEye
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