N1.4tn spent as fuel subsidy per year - FG
- The NNPC said it was shouldering the burden of subsidy in the fuel industry
- It said this was considered an under-recovery
- It blamed the increase in oil smuggling in the cross-border town for the huge demand in the commodity
The Nigerian National Petroleum Corporation (NNPC) has revealed that it spends N1.4 trillion per year as fuel subsidy.
According to the federal government, the NNPC has been shouldering this burden as it is the last resort in the supply of petrol.
The Punch reports that the government described the amount as under-recovery in order to sustain the 50 million litres of PMS consumed across the country.
Ibe Kachikwu who is the minister of state for petroleum disclosed this at a Liquefied Petroleum Gas workshop organised by the Federal Ministry of Petroleum Resources in Abuja on Thursday, April 5. He said due to the rapid increase of filling stations in communities with international lands was responsible for the huge under recovery.
READ ALSO: There is no plastic fish in Nigeria - NAFDAC
Asked what the government was doing to handle the under-recovery, the minister said: “Let me focus on gas. That (under-recovery) is being addressed at very high levels."
Maikanti Baru who is the group managing director of the NNPC in his reaction said the increase in filling stations in cross border town has spiked the increase in smuggling to foreign countries and this has been difficult to track.
He noted that there has been an abnormal surge in the evacuation of petrol from less than 35 million litres per day to more than 60 million litres per day showing the correlation between the smuggling activities and increase in demand.
Baru said that due to the difference in the price of petrol between Nigeria and other neighbouring countries, some criminals were using their stations as frontiers to smuggle the product.
He said: “The NNPC is concerned that continued cross-border smuggling of petrol will deny Nigerians the benefit of the Federal Government’s benevolence of keeping a fixed retail price of N145 per litre despite the increase in PMS open market price above N171 per litre.”
Kachikwu also added: “There is a lot more private sector investment in upstream than there is in downstream in terms of actual infrastructure, and that is why the government is more focused in upstream. We are also hoping to launch an infrastructure rebirth map for the oil sector over the next two months. And I hope the President will launch it.
“And the effect of that will be to open up tariff, create policy positions that will enable people to go in and invest in critical infrastructure that is needed. Because everywhere you look, whether it is distribution of petroleum products, it is done massively through trucks rather than through pipelines.
“Now, whether it is to take crude to refineries or whether it is being able to distribute gas all over the country, infrastructure is so key. There is a lot of stranded gas everywhere, lots of stranded power everywhere; distribution is key, infrastructure is key. We need to find a way or find enough incentives that will enable the private sector to go in very bullishly and put the money where it is supposed to be.”
PAY ATTENTION: Install our latest app for Android, read best news on Nigeria’s #1 news app
Legit.ng had reported that the NNPC on Friday, January 19, gave reasons for paying ‘subsidy’ on petrol without appropriation from the National Assembly.
The managing director of the Petroleum Products Marketing Company (PPMC) Umar Ajiya said the NNPC Act is a law on its own which the corporation implements with or without the National Assembly.
Ajiya while featuring on Channels TV programme said the NNPC has the right to run its finances independently.
Fuel scarcity: This is getting too much for us - Nigerians lament - on Legit.ng TV:
Source: Legit.ng
