Atiku, on Monday, has described as opaque the payment of oil subsidy by the Tinubu administration.
The former vice president said in a statement, “The latest revelations circulating through credible media outlets regarding the federal government’s covert continuation of the subsidy on Premium Motor Spirit (PMS) represent another chapter in the opaque governance under President Bola Tinubu’s administration.
“This development starkly contrasts with the president’s firm assertions in a national broadcast, which followed closely on the heels of public protests decrying poor governance, where he declared the subsidy regime concluded.
“However, disclosures prior to his announcement have consistently indicated a resurgence of subsidy payments, albeit through less transparent means.”
According to Atiku, “This dissonance between the president’s words and his actions not only undermines the moral fabric of his leadership but also significantly erodes the credibility of his administration.
“At a time when the nation grapples with severe fuel scarcity and escalating energy costs, the continued delays in the re-operation of the Port Harcourt refinery stand as a national disgrace — a failure that rests firmly on the shoulders of President Tinubu, who also holds the office of the Minister of Petroleum Resources.”
Atiku also said, “The persistent denials by NNPC Limited only exacerbate the plight of Nigerians, who endure severe difficulties due to fuel shortages and resultant price inflations.”
He explained that amid a contentious dispute between local investors favouringrefinery operations and those advocating imported PMS, the president’s silence was profoundly disconcerting.
According to Atiku, “It is paramount that the president, who is intrinsically responsible for overseeing and intervening in such critical disputes to safeguard national interests, steps up to fulfil these expectations.
“The veil of secrecy shrouding the downstream petroleum sector, coupled with alarming reports of NNPC Limited diverting funds intended for other purposes to cover subsidy payments, adds layers of confusion that are unbearably unsettling.
“If these reports hold true, they portend grave implications for the integrity of our fiscal federalism. It is imperative, therefore, that the Tinubu administration urgently clarify the entanglements surrounding the subsidy policy and the refining of PMS.”
Tinubu gives NNPC go-ahead to spend federation’s dividend to offset subsidy backlog
Despite persistent denial, President Bola Tinubu approved a request by Nigerian National Petroleum Company Limited (NNPCL) to spend the 2023 final dividends due to the federation to pay for petrol subsidy, TheCable reported yesterday.
Tinubu also gave the go-ahead for the suspension of the payment of 2024 interim dividends to the federation in order to augment NNPC’s cash flow, the report added.
But NNPCL insisted yesterday that it was not paying subsidy, but only interfacing with the federal government to manage petrol importation and sorting out differentials when necessary.
Chief Financial Officer of the national oil company, Umar Ajiya, said yesterday in Abuja, “In the last eight or nine years, this company or corporation, as it was, has not paid anybody a dime or N1 as subsidy. No one has been paid a kobo by the NNPC in the name of subsidy and no marketer has received money from us by way of subsidy.
“What has been happening is that we have been importing Premium Motor Spirit (PMS) or petrol, which is landing at a certain cost price, and government is telling us to sell at half price. The difference between that landing price and pump price is what we call shortfall or you call it subsidy.
“And the deal is between the federation and ourselves to reconcile and sometimes they give us money, sometimes we make up.”
But the report pointed out that in addition, the national oil company told the president it will not be able to remit taxes and royalties to the federation account for now because of the subsidy payments, which it termed “subsidy shortfall/FX differential”.
The report said the cumulative petrol subsidy bill from August 2023 will hit N6.884 trillion by December 2024 — leaving NNPCL unable to remit N3.987 trillion in taxes and royalties to the federation account.
It said NNPCL was expected to pause the payment of interim dividends for eight months this year — from May to December.
Interim dividends — based on inflow projections — are usually remitted monthly into the federation account and shared by the three tiers of government, while the final dividends are paid at the end of the year after reconciliation.
Under the Petroleum Industry Act (PIA), NNPCL is obligated to pay taxes and royalties as well as dividends to the federation, its sole shareholder.
In June 2024, NNPCL, the report said, cried out to Tinubu that the subsidy payments were negatively impacting its cash flow and it was struggling to remain a “going concern”.
The company said it might not be able to sustain petrol imports because of the ballooning subsidy bill, which it blamed on “forex pressure”.
Group Chief Executive Officer of NNPCL, Mele Kyari, was said to have informed the president that when subsidy was removed in June 2023, it led to monthly savings of N400 billion to the federation.
Kyari said that enabled the company to remit its taxes and royalties totalling N2.032 trillion into a sequestered account at the Central Bank of Nigeria (CBN) as at January 2024.
He said the development was short-lived with the devaluation of the naira, which led to month-on-month escalation in the NAFEX exchange rate.
In August 2023, NNPCL moved from surplus to negative in fuel importation costs, incurring a subsidy bill of N52.73 billion, the report revealed.
That increased to N57.59 billion in September and N212.28 billion in October, before ballooning to N665.60 billion in November, when exchange rate had more than doubled from the time subsidy was removed, TheCable report added.
The bill fell slightly to N537.66 billion in December before hitting a new high of N693.67 billion in January 2024.
According to the report, “The bill dropped to N592.09 billion the following month and N497.39 billion in March before rising again to N833.68 billion in April, forcing Kyarito send an SOS to the president.
“He said the situation had continued to exert ‘undue pressure’ on the NNPC, leading to its inability to remit royalties and taxes into the federation account.
“Kyari further said national energy security was being threatened as the NNPC might not be able to sustain petrol imports beyond July 2024.”
In making his case to the president, Kyari was reported to have said NNPC had implemented a number of strategies between August 2023 and April 2024 but the situation was getting out of hand.
The strategies included improving oil production by fighting theft and vandalism, debt rescheduling/forward sales, payment deferrals to suppliers and contractors, deferrals of non-critical projects, and debt recovery.
However, the situation was still not looking good, as projections showed a consistent increase in cash flow deficit, mainly because of the exchange rate.
Whereas an estimated N3.987 trillion in taxes and royalties will be due the federation account by December 2024, NNPCL said it will still be owed N2.897 trillion after reconciliation of its obligations and subsidy shortfall.
Kyari was said to have requested that Tinubu should approve the utilisation of the final dividends due the federation for 2023 and deferment of the remaining interim dividends for 2024 to defray the subsidy costs.
“The president approved Kyari’s request on June 6, 2024,” the report said.
The situation was made worse because when petrol subsidy was removed in June 2023, the exchange rate was N463/$, but now about N1,500/$, while crude oil prices had also been high, making it a “double whammy” for NNPCL.
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