Within a space of two months, the amount that was spent by the Nigerian National Petroleum Corporation in subsidising Premium Motor Spirit, popularly known as petrol, rose by over 1,174 per cent; latest figures obtained from the corporation on Thursday have shown.
Specifically, the corporation spent a total of N206.59bn on Fuel subsidy in January and February 2019, in contrast to N16.21bn that was spent for the same purpose in November and December last year.
The NNPC, however, classified this spending as under-recovery, as it had repeatedly argued that only the National Assembly could approve subsidy.
Under-recovery is the additional cost that the NNPC is incurring in subsidising the price of petrol in order to ensure that it is sold at the regulated price of N145 per litre, even when the real market price is above this regulated rate.
Findings from NNPC’s Monthly Financial and Operations Report for May 2019, which was released on Thursday, showed that the difference between what the oil firm spent on subsidy in January/February 2019 and November/December 2018 was N190.37bn.
Since 2017, NNPC had been the sole importer of petrol into the country and it deducts the cost incurred as under-recovery before making remittances to the Federation Account.
In its latest report, the corporation stated that it recorded under-recovery of N104.35bn in January 2019, rising by 682 per cent or N91bn from N13.34bn recorded in December 2019.
The amount paid as under-recovery dropped by 1.9 per cent to N102.338bn in February 2019, an equivalent of N2.01bn.
Further analysis of the report showed that the amount declared as under-recovery by the oil firm in November 2018 stood at N2.88bn, dropping sharply from N40.53bn recorded in October 2018.
This came as the corporation called for collaboration with Chevron Nigeria Limited to establish a condensate splinter refinery in order to grow local refining of crude oil.
The appeal was made on Thursday by the Group Managing Director, NNPC, Mele Kyari, when the management of Chevron was led by its Managing Director, Jeff Ewing, on a business visit to the NNPC headquarters in Abuja.
Kyari stated that setting up refineries to end the shame of fuel importation was not just a responsibility for NNPC alone but also for its joint venture partners.
He also urged CNL to work closely with the corporation to evolve modalities for a downward review of the cost structure of crude oil production in Nigeria in order to boost profit and revenue for the country.
“We hold Chevron Nigeria Limited in a very high esteem for her efficiency and cost optimisation. We look more up to the company to increase production and reserve, reduce cost and increase local refining capacity,” he said.