On Friday, the Nigerian National Petroleum Company (NNPC) revealed that over N400 billion is being spent on subsidizing Premium Motor Spirit (PMS), commonly known as petrol, on a monthly basis. This was disclosed by Malam Mele Kyari, the NNPC’s Group Chief Executive Officer, during the final cutover event to change NNPC’s status from a corporation in Abuja.
Kyari clarified that NNPC is expending about N202 million as subsidy on every litre of petrol sold across Nigeria and pumping around 65 million litres of PMS into the market daily. The oil company will continue to provide PMS for Nigeria, however, the monthly subsidy of over N400 billion has placed a severe strain on NNPC’s cash flow.
Kyari noted that NNPC is the exclusive importer of petrol into Nigeria, and private oil marketers have stopped importing petrol into the country due to difficulties in accessing the US dollars required for importing PMS. He added that the subsidy was stipulated by law and the provisions of the Appropriation Act, and that N202 was the difference between the landing cost of N315/litre and the sale price of N113/litre.
Kyari stressed that the subsidy was necessary due to the country’s inability to produce the amount of petrol required to meet its daily consumption.