Mele Kyari, the group chief executive officer (GCEO) of the Nigerian National Petroleum Company (NNPC) Limited, has revealed that the federal government still owes the firm a staggering sum of N2.8 trillion, which was spent on petrol subsidy.
During a press briefing following a meeting with President Bola Tinubu in Abuja on Tuesday, Kyari emphasized that the subsidy payment has become unsustainable, hindering the company from adequately funding its core operations.
He stated, “Today, we are waiting for them to settle up to N2.8 trillion of NNPC’s cash flow from the subsidy regime, and we can’t continue to build this.”
Kyari further explained that despite the provision of “N6 trillion in 2022, and N3.7 trillion in 2023,” the NNPC has not received any payment from the federation. The NNPC had been using its cash flow to cover the petrol subsidy payments, but the government has been unable to reimburse the N2.8 trillion that has already been spent.
He elaborated, “That means they (the federal government) are unable to pay, and we have continued to support this subsidy from the cash flow of the NNPC. When we deduct our fiscal obligations of taxes and royalties, there is still a balance that we are funding from our cash flow. And that has become very difficult and it is affecting our other operations.”
Kyari expressed concern that the inability to retain cash for investment in their core businesses poses significant challenges for the company.
He stressed that the government must compensate and repay the NNPC for the money spent on the subsidy.
He stated, “So, today the country does not have the money to pay for the subsidy. There is an incremental value that will come from it. But it is not an issue of whether you can do it or not because today we cannot afford it, and they are not able to pay our bill. That comes to how much the federation owes the NNPC now. Today, we are waiting for them to settle up to N2.8 trillion of NNPC’s cash flow from the subsidy regime, and we cannot continue to build this.”
It was reported by Investors King that subsidy payments reached N3.3 trillion in the previous year, spanning 11 months. The immediate past federal government had budgeted N3.35 trillion for energy subsidy in the first half of the year, assuring that under-recovery payments would cease.
On April 5, the federal government announced it had secured $800 million loan from the World Bank as part of its post-subsidy palliative plans.
Regarding the recent petrol queues across the country, Kyari emphasized that the confusion arose from the president’s statement that “subsidy is gone.”
Marketers and consumers were seeking clarity on the matter, which caused a rush for petrol and subsequently led to queues.
Kyari assured Nigerians that the government would implement measures to mitigate the impact of subsidy removal starting in June.
