Against denials by the Federal Government that it was paying subsidy, the Nigerian National Petroleum Corporation, NNPC, confirmed deduction of N139.333 billion as subsidy for Premium Motor Spirit, PMS, also known as petrol, from its domestic crude oil and gas sales proceeds from January to March 2018, cutting down on its remittances to the Federation Account.
Contained in the NNPC’s report of March 2017 Monthly Financial and Operations Report, the amount deducted by the NNPC for subsidy is far higher than the capital allocation to some key ministries and parastatals in the 2018 budget.
Specifically, the amount the NNPC deducted for under-recovery in just three months, was 3.22 times higher than total capital allocation of N43.23 billion for the Federal Ministry of Science and Technology in the 2018 budget.
The amount is also 1.61 times higher than the N86.486 billion allocated to the Federal Ministry of Health for capital expenditure and 1.3 times higher than the N102.901 billion capital allocations for the Federal Ministry of Education in the 2018 budget.
In addition, the subsidy deduction was 0.93 times and 0.95 times the N149.198 billion and N147.2 billion capital allocations for the Federal Ministry of Agriculture and Rural Development and the Federal Ministry of Water Resources respectively in the 2018 budget.
Apart from deductions for under-recovery also known as fuel subsidy, the NNPC also makes deductions for crude oil losses, petroleum product losses, pipeline repairs and management cost, and Joint Venture Cost Recovery.
Specifically, the report disclosed that between January and March 2018, the NNPC allocated N1.243 billion, N2.394 billion, N26.844 billion and N138.426 billion for crude oil losses, petroleum product losses, pipeline repairs & management cost, and Joint Venture Cost Recovery respectively.
Giving a breakdown of the deductions for fuel subsidy, the report noted that in January, the NNPC allocated N45.783 billion for the expense item, while for February and March 2018, the NNPC deducted N59.52 billion and N34.03 billion respectively.
Ironically, the report pointed out that deduction for the under-recovery within the three-month period represented 74.19 per cent of its total transfers to the Federation Account, which stood at N187.815 billion within the period under review.
However, the NNPC also made remittances to the Federation Account from its export of crude oil and gas. Specifically, between January and March 2018, the NNPC remitted $363.154 million to the Federation Account, after deducting $1.057 billion for Joint Venture Cost Recovery from its total crude oil and gas sales proceeds of $1.421 billion in the period under review.
NNPC’s deductions without recourse to the other tiers of governments had been a major source of controversy between it and the state governors, who had continually questioned the various deductions unilaterally made by the NNPC.
Recently, the Federation Account Allocation Committee, FAAC, meeting for June 2018 was deadlocked because of alleged under-remittance by the NNPC as claimed by the 36 state governors.
Furthermore, the report stated that the NNPC recorded a trading surplus of N11.72 billion in March 2018, representing a decline of 29.9 per cent from a surplus of N16.72 billion recorded in February 2018.
It also added that the NNPC recorded operating revenue of N366.31 billion sliding from N374.41 billion in the preceding month, while its operating expenditure stood at N354.59 billion compared to N357.69 billion in February 2018.