The Nigerian National Petroleum Company (NNPC) Limited has blamed its inability to remit any funds to the Federation Account in 2022 on payment of subsidy on Premium Motor Spirit, popularly called petrol.
The firm, however, said it was able to remit N4.5 trillion between January and September 2023, especially as a result of the removal of subsidy on the product.
Chief Financial Officer, NNPCL, Umar Ajiya, made this known in a 5.24 minutes video released by the firm
According to him, fuel subsidies stopped the revenue generating firm from remitting taxes and royalties to the Federation Account, as well as halted the company from making profit.
“The lingering constraint of fuel subsidy payment hampered its (NNPCL) growth potential, until a new administration emerged, bringing an end to the subsidy regime and saving the company from bankruptcy and setting it on a path of financial prosperity,” he explained.
Continuing, Ajiya said this enabled the oil firm to grow its profit from N674.1 billion in 2021 to N2.54 trillion by the third quarter of 2022.
President Bola Tinubu declared during his inaugural speech on May 29, 2023, that “subsidy is gone!” The declaration by the President was immediately enforced by NNPCL the next day. NNPCL is Nigeria’s sole importer of PMS.
He said President Bola Tinubu’s declaration on the day of his inauguration that the era of subsidy was gone, literally saved the nation N400 billion on average every month.
“And what that meant was that the totality of the entitlements of tax, royalties and profits were all going into subsidy.
“And that was why we reached a position in 2022 where we literally remitted zero to the Federation Account. It was unpalatable, but we can’t give what we don’t have.
“We were taking NNPC’s cash flows from other operations to augment for products and it could not be sustained beyond June 2023.”
Fuel subsidy gulped over N3.3 trillion in 2022. The cost of the commodity jumped by over 250 per cent immediately subsidy was removed by Tinubu.
Ajiya confirmed that the removal of subsidy had made the company start making remittances into the Federation Account.
“We have now begun to pay dividends to the federation. We are also paying our due obligations in terms of taxes and royalties,” he stated.
The company further stated in the documentary that the end to subsidy enabled it to contribute N4.5 trillion to the Federation Account in nine months.
“For the first time in a long time, NNPC Ltd in 2023 contributed to the Federation Account, accounting for N4.5tn between January and September 2023,” he added.
