The Nigerian National Petroleum Company Limited (NNPCL) has revealed that it spends over N400bn every month on subsidizing Premium Motor Spirit (PMS), popularly called petrol.
This was disclosed by the Group Chief Executive Officer, Mele Kyari, during the ongoing Final Cutover to NNPC limited, from being a corporation.
Kyari explained that the oil company spends about N202 as subsidy on every litre of petrol consumed across the country, and approximately 65 million litres of PMS is pumped into the market by NNPCL daily.
NNPCL is the sole importer of petrol into Nigeria and has been playing this role for several years. The company bears the huge cost of fuel subsidy while other private oil marketers stopped importing petrol into Nigeria due to the difficulty encountered in accessing the United States dollars required for PMS imports.
Kyari further explained that although NNPCL would continue to provide PMS for Nigeria, the over N400 billion monthly subsidy had been a severe strain on NNPCL’s cash flow.
He stressed the importance of diversifying the country’s economy to ease the burden on the oil sector and reduce Nigeria’s dependence on crude oil.
The revelation of the staggering amount spent on fuel subsidy highlights the urgent need for the government to find alternative ways to fund the subsidy or explore other sources of energy.
The continuous payment of the subsidy would undoubtedly impede the country’s economic growth and development.
The government must prioritize the diversification of the economy and the development of alternative sources of energy to reduce the burden on the oil sector and minimize the cost of subsidies, Investors King explained. This would provide a more sustainable solution to Nigeria’s energy challenges and contribute to the growth and development of the country.