Following the payment of fuel subsidy by the Federal Government, the Nigerian National Petroleum Corporation (NNPC) says there will be zero remittance to the Federation Accounts Allocation Committee (FAAC) for the month of April 2021.
The NNPC, in a letter dated April 26 and addressed to the Accountant-General Federation, said that it recorded a shortfall of N111,966,456,903.74 in February as a result of the landing cost of Premium Motor Spirit (PMS) which was N184 per litre as against the subsisting ex-coastal price of N128 per litre.
The shortfall, according to the corporation, is traced to an inconclusive discussion on the hike in fuel price between the government and the labour unions.
The letter stated that this will now be deducted from April 2021 Oil and Gas Proceeds, in a bid to ensure continuous supply of petroleum products.
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NNPC said its letter:
Further to our previous correspondences on the above subject, we wish to advise on the projected remittance to the Federation Account for the months of April (May FAAC) to June 2021 (July 2021 FAAC).
The Accountant-General of the Federation is kindly invited to note that the average landing cost of Premium Motor Spirit (PMS) for the month of March 2021 was N184 per litre as against the subsisting ex-coastal price of N128 per litre, which has remained constant notwithstanding the changes in the macroeconomics variables affecting petroleum products pricing.
As the discussions between Government and the Labour are yet to be concluded, NNPC recorded a value shortfall of N111,966,456,903.74 in February 2021 as a result of the difference highlighted above. Accordingly, a projection of remittance to the Federation for the next three months is presented in the attached schedule.
Accordingly, the AGF is invited to note that the sum of N111,966,456,903.74 will be deducted from April 2021 Oil and Gas Proceeds due to the Federation in May 2021, which will translate to zero remittance to the Federation Account from NNPC in the month of May 2021.
This is to ensure the continuous supply of Petroleum Products to the nation and guarantee energy security. Please accept the assurances of my highest regards.
Earlier in March, the Group Managing Director (GMD) of the NNPC, Mele Kyari, noted that the corporation may no longer be able to bear subsidy burden of providing subsidy for petrol.
Kyari had said:
The price could have been anywhere between N211 and N234 to the litre. The meaning of this is that consumers are not paying for the full value of the PMS that we are consuming and therefore someone is paying that cost.
As we speak today, the difference is being carried in the books of NNPC and I can confirm to you that NNPC may no longer be in a position to carry that burden.
