Payment peaked during 2019 general elections
It was inconsistency all the way as it was gathered yesterday that the Nigerian National Petroleum Corporation (NNPC) spent N843.121 billion on fuel subsidy in 13 months.
The disturbing revelation comes at a time the Nigeria Governors’ Forum (NGF) decried the continued payment of oil subsidy by the Federal Government.
An analysis of the monthly financial statement of the corporation showed that the amount expended to bridge the price difference of petrol rose exponentially by 682 per cent in January this year.
Indeed, the amount paid on under recovery in January and February 2019 stood at a record N206.585 billion, indicating an increase of N190.37 billion compared to the N16.212 billion posted for the last two months of 2018.
While the NNPC has distanced its self from claims of cash transfer to President Muhammadu Buhari’s campaign organisation during this year’s general elections, the payment was, however, curiously effected in the wake of the polls.
The presidential and national assembly elections held on February 23 while the governorship and state assembly polls took place on March 9.
The national oil company had told the Federation Account Allocation Committee (FAAC) that it spent N623.16 billion on under-recovery, also known as subsidy, from January to November 2018. In December the figure was only N13.336 billion but rose in January to N104.347 billion and February, N102.338 billion, bringing the figure to N843.121.
The corporation has remained the only importer of petrol, deducting cost for under-recovery before making remittances to the Federation Account.
The cost the agency incurs is to subsidise the product, by ensuring that it is sold at retail stations at the regulated N145 per litre, even when the real market value is above the pump price.
The subvention dropped by 1.9 per cent to N102.338 billion in February 2019, an equivalent of N2.009 billion. In November 2018, it was N2.876 billion, dipping from the N40.53 billion recorded the previous month.
In July, August, September, October and November 2018, the financial statement revealed that NNPC declared an under-recovery of N51.2 billion, N65.9 billion, N45.8 billion, N40.5 billion and N2.9 billion.
While the naira remained stable within these periods amid low price of crude oil in the international market, averaging $64.75 per barrel in November, the corporation declared N2.876 billion as subsidy.
Yet in December when the price of crude oil dropped to $57.36 per barrels, the NNPC announced a N13.336 billion under-recovery.
Similarly, in January when crude oil averaged $59.41 per barrel, the organisation declared N104.347 billion as fuel subsidy, while it deducted N102.338 billion when the price of crude oil was $63.96 per barrel.
However, the spokesperson of NNPC, Ndu Ughamadu, tied the rise to the volatility of crude oil price and the growing activities of smugglers who put pressure on demand.