FG still owing NNPCL over $9.74bn fuel subsidy debt – Sources

Despite the claims by the Nigeria Extractive Industries Transparency Initiative (NEITI) that the defunct Nigeria National Petroleum Corporation (NNPC) did not remit $1.9 billion to the federation account in 2021 before transitioning to a commercial venture, the Federal Government has the biggest indebtedness to the national oil company with about N4.1 trillion ($9.74bn) for subsidy payment, DAILY POST has learnt.

NEITI had, last Monday, disclosed in its 2021 oil and gas report unveiled in Abuja that NNPC failed to remit $1.9 billion to the Federation Account Allocation Committee (FAAC) before the transition.

Recall that the corporation transitioned into NNPC Limited on July 19, 2022, to operate as a commercial entity under the regulation of the Companies and Allied Matters Act (CAMA).

President Bola Tinubu had on May 29 removed the subsidy on petrol following the inability of the Federal Government to fund the huge payment burden.

Before the removal of the petrol subsidy, the NNPCL was the sole importer of petrol into the country, spending about N400 billion monthly on behalf of the federation through an arrangement known as under-recovery.

Subsidy or under-recovery is the shortfall for the underpriced sales of premium motor spirit, better known as petrol.

From January 2023 to May 2023, petrol under-recovery totalled N1.828 trillion, which is 55 per cent higher than the N1.27 trillion paid in the corresponding period of 2022.

Sources close to the Presidency said although NNPCL received several letters from FAAC requesting payment of about N2.8 trillion allegedly owed the federation accounts, the company said it would not pay pending the reconciliation of the N4.1 trillion debt the Federal Government owed it.

“The federation owes NNPC almost N4.1 trillion, and NNPC owes about N2.8 trillion to the Federal Government, so they should actually give it a cheque for the debt of N1.3 trillion they owe NNPC Limited,” one of the sources said.

President Bola Tinubu has already set up an inter-agency committee to resolve the lingering row between the NNPC Limited and FAAC in the last couple of years.

The Presidency said vested interests had told the new president things that were not entirely factual, prompting the national oil company to write that the matter should be resolved once and for all.

“So many things have been told to Mr President since assuming office by some vested interests that NNPC Limited has refused to pay into the federation accounts.

“And because we want the general public to know the truth, NNPC Limited management wrote the President to investigate the matter and Mr President has graciously approved that an inter-agency committee be set up to investigate and reconcile the matter,” the source stated.

FAAC had severally accused the NNPCL of short-changing it by refusing to pay N2.8 trillion to the federation account from crude sales, royalties and taxes, while the company, on the other hand, insisted the Federal Government owed it over N4.1 trillion in subsidy payment, power debt and other sundry charges.

The committee, which began sitting in June at the Ministry of Finance, has been mandated to reconcile the controversies surrounding the alleged debt the Federal Government owes NNPCL and the N2.8 trillion that the NNPCL is said to have failed to remit to the federation account.

Aside from the finance ministry and NNPCL, other members of the debt reconciliation committee include the Nigerian Upstream Regulatory Commission (NUPRC), Federal Inland Revenue Service (FIRS), Office of the Accountant General of the Federation (OAGF) and FAAC Post-Mortem Sub-Committee.

The establishment of the committee by the President followed a memo dated June 13, 2023, by the Group Chief Executive Officer (GECO) NNPC, Mallam Mele Kyari, appealing to him to intervene in the matter.

The letter stated that this was to put to rest all the allegations and counter-allegations by FAAC and NNPCL on the status of the debts and remittances.

It was learnt that the committee has submitted a preliminary report to the President.