[NIGERIA] : NNPC spends N24bn monthly as fuel subsidy – Baru

The Nigerian National Petroleum Corporation on Sunday announced that it was spending N774m daily (about N23.99bn monthly) as subsidy on the 50 million litres of Premium Motor Spirit consumed across the country.
Although it described the amount as under-recovery, the oil firm stated that the amount was due to the proliferation of filling stations in communities with international land and coastal borders across the country.
The Group Managing Director, NNPC, Maikanti Baru, said the multiplication of filling stations had energised unprecedented cross-border smuggling of petrol to neighbouring countries, making it difficult to sanitise the fuel supply and distribution matrix in Nigeria.
Baru disclosed this when he led a management team of the corporation on a visit to the Comptroller-General, Nigeria Customs Service, Col. Hameed Ali (retd.), according to a statement issued on Sunday by the firm’s Group General Manager, Group Public Affairs Division, Ndu Ughamadu.
Baru stated that a detailed study conducted by the NNPC indicated strong correlation between the presence of the frontier stations and the activities of fuel smuggling syndicates.
He said the activities of the smugglers led to the recent abnormal surge in the evacuation of petrol from less than 35 million litres per day to more than 60 million litres per day, which was in sharp contrast with established national consumption pattern.

Providing a detailed presentation of the findings, the NNPC boss noted that 16 states, having among them 61 local government areas with border communities, accounted for 2,201 registered fuel stations.
He stated that the tanks of the facilities had a combined capacity of 144,998,700 litres of petrol.
Baru stated that in the same vein, eight states with coastal border communities spread across 24 LGAs accounted for 866 registered fuel outlets with combined petrol tank capacity of 73,443,086 litres.
He said a further breakdown of the findings showed that among the states with land border, three LGAs in Ogun State accounted for 633 fuel stations with combined petrol tankage of 40,485,000 litres, while nine LGAs in Borno State had 337 fuel outlets with combined petrol storage capacity of 21,114,480 litres.
According to him, Lagos with one LGA as border community has 235 registered fuel stations with total storage facility of 19,916,600 litres.
The statement noted that on the coastal front, Lagos with six LGAs led with 487 registered fuel stations with combined in-built storage capacity of 50,239,560 litres.
It said, “Akwa Ibom, with five LGAs, has 134 registered retail outlets with capacity to store 8,322,986 litres; while Ondo State, with two LGAs, has 110 fuel stations with capacity to store 3,871,320 litres.”

Baru explained that because of the obvious differential in petrol price between Nigeria and other neighbouring countries, it had become lucrative for the smugglers to use the frontier stations as a veritable conduit for the smuggling of products across the border, adding that this had resulted in a thriving market for Nigerian petrol in Niger Republic, Benin Republic, Cameroon, Chad and Togo, as well as Ghana, which has no direct borders with Nigeria.
He was quoted as saying, “The NNPC is concerned that continued cross-border smuggling of petrol will deny Nigerians the benefit of the Federal Government’s benevolence of keeping a fix retail price of N145 per litre despite the increase in PMS open market price above N171 per litre.”
He noted that based on the heightened petrol consumption rate of 50 million litre per day, the corporation was incurring an under-recovery of N774m every day.

Welcoming the NNPC boss and his team to the Customs headquarters, Ali said the NCS would work with the corporation to stem the tide of cross-border smuggling of petroleum products, noting that all hands must be on deck to ensure the economic survival of the country.
He thanked Baru for the elaborate data provided by the NNPC on the fuel supply situation, adding that this would enable the service to fashion out the appropriate architecture to combat the menace.

Ali called on the authorities to tackle the issue of price differentials, which he noted were the underlying motivation for smuggling activities.
Reacting to the statement by the NNPC, the Petroleum and Natural Gas Senior Staff Association of Nigeria noted that subsidising petrol by N774m on a daily basis was not sustainable.
PENGASSAN stated that the NNPC was also aware of this, which was why the oil firm had been pushing for the revamp of the country’s refineries.

The PENGASSAN spokesperson, Fortune Obi, told one of our correspondents that international oil companies were also providing assistance for the revamp of the refineries in order to cut down on the importation of petrol.
“The NNPC leadership also knows that it (N774m daily under-recovery) is not sustainable and that is why they are strongly pushing for the refineries’ turnaround maintenance to put them back into full functionality. I’m aware some IOCs are providing support for the rehabilitation,” he added.

The Nigeria Labour Congress faulted the position of the NNPC on the payment of subsidy on petrol, stressing that the corporation’s under-recovery claim was not transparent.
The Secretary-General, NLC, Peter Ozo-Eson, said the importation of fuel should be opened up to competitors and must not be handled by just the NNPC.
He stated, “Our position from the beginning has been very clear. If we continue this petrol import regime, we will continue to face this type of situation, given that we do not have control over global crude oil prices and the volatility of the exchange rate. These two issues will continue to create situations like this.

“Now, if the NNPC claims to be spending such amount, there is no way for us to determine the actual value that was spent since the National Assembly does not have the power to appropriate subsidy claims. The NNPC cannot come out to tell us that it spent the money that is meant to accrue to the Federation Account on subsidy.
“This is a crisis that is on the ground and we will continue to insist that we must get a transparent regime of subsidy payment that is opened up and not an opaque process where the NNPC alone does what it is doing now. That has been our position and that is the right thing to do.”