21 November 2012

Nigeria: FG Owes NNPC U.S.$8.1 Billion in Subsidy

Photo: Vanguard
The Nigerian National Petroleum Corporation (NNPC) has asked the committee to prove allegations of misdeeds levelled against it in the subsidy report.

The Federal Government owes the Nigerian National Petroleum Corporation (NNPC) more than $8.1 billion in subsidy payments, the Associated Press reported, quoting an unnamed NNPC source.

According to the AP, the debt is straining the corporation's ability to import petrol petrol and has added to its financial burden after private companies stopped importing earlier this year.

Despite producing about 2.4 million barrels of crude oil a day, Nigeria imports most of its petrol because its refineries are unable to meet the nation's demand.

The NNPC source also said the corporation, which used to account for 60 per cent of Nigeria's imports, now accounts for all of them.

Premium motor spirit, also known as petrol has remained largely unavailable to users across the country since early this year, following the refusal of major and independent oil marketers to import fuel due to the delay in the payment of their outstanding subsidies.

Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), Mr. Thomas Olawore, told THISDAY last week that the NNPC had never single-handedly curbed fuel crisis in the past, adding that the fuel scarcity has been lingering because major marketers have not been importing fuel owing to funding challenges.

Olawore noted that the major marketers did not deliberately abandon fuel importation for the NNPC but were forced to do so because of the non-payment of their all outstanding subsidy claims by the government.

He acknowledged that there was a problem in payment of subsidy claims in the country, which justified the setting up of the Aig-Imoukhuede Committee to verify and reconcile the claims but noted that the attempt to solve this problem had created some discomfort to the marketers.

"We do not get our subsidy claims as regularly as we would want. Now, if you do not have money, there is no way you can import fuel. If a bank gives you money and you don't go back to pay the principal and the interest, the bank is not going to give you more loans.

That is where we are now. We have brought in products but we have not been fully paid. The Minister of Finance has paid some of our claims but we wish to appeal to her to please pay all the outstanding claims because delays will increase the interest payable," he said.

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