NNPC CEO calls for an end to unsustainable subsidy regime and highlights financial strain on national oil company
In a press conference held today, the Group Chief Executive Officer (GCEO) of Nigerian National Petroleum Company Limited (NNPCL), Melee Kyari, disclosed a significant fuel subsidy payment deficit of ₦2.8 trillion faced by the federal government.
The announcement came after a meeting with President Bola Tinubu, where Kyari was accompanied by Farouk Ahmed, the Chief Executive Officer of the Nigerian Mainstream and Downstream Petroleum Regulatory Authority (NMDPRA).
During the press conference, Kyari expressed his support for President Tinubu’s recent statement in his inauguration speech, signaling the end of the subsidy regime. He emphasised that the current subsidy burden had become unsustainable, hindering the NNPCL’s ability to allocate funds for its primary operations.
Recall, NNPCL in Februrary 2023, under the Buhari administration took over the assets of the nation’s oil company (NNPC) after 46 years of its operations as a corporation.
The recent reappearance of petrol queues across the country since Monday, May 29, 2023, was acknowledged by Kyari, who attributed it to the uncertainty surrounding the president’s pronouncement on the removal of subsidies. He explained that both marketers and consumers were seeking clarity on the implications, leading to increased demand and resulting in queues at fuel stations.
To address the consequences of subsidy removal, Kyari revealed that the government planned to implement measures to mitigate its impact. He also shed light on the financial strain faced by the NNPCL, stating, “Since the allocation of ₦6 trillion in 2022 and ₦3.7 trillion in 2023, we have not received any payment from the Federation. As a result, we have been using the NNPC’s cash flow to support the subsidy, even after fulfilling our fiscal obligations. This situation has become increasingly challenging and is affecting our core operations.”
Highlighting the urgency for reimbursement, Kyari continued, “We have repeatedly urged the government to reimburse NNPC for the funds we have expended on the subsidy. Currently, the country lacks the funds to sustain the subsidy.
“While there may be some incremental value in its continuation, the reality is that we cannot afford it, and the government is unable to settle our bill. As of now, the Federation owes NNPC approximately ₦2.8 trillion in outstanding cash flow from the subsidy regime. This situation is untenable and cannot persist.”