TheNewsGuru

Tag: Fuel Subsidy

  • N2.2bn subsidy scam: Ex-PDP chairman’s son, accomplice jailed 14 years

    N2.2bn subsidy scam: Ex-PDP chairman’s son, accomplice jailed 14 years

    An Ikeja Special Offences Court on Tuesday sentenced Mamman Ali and Christian Taylor to 14 years’ imprisonment each over a N2.2 billion oil subsidy fraud.

    Ali, son of a former National Chairman of  the Peoples Democratic Party (PDP), Ahmadu Ali, and Taylor were charged by the Economic and Financial Crimes Commission (EFCC).

    The EFCC charged them alongside Nasaman Oil Services Ltd with an amended 57-count charge bordering on conspiracy, obtaining money by false pretences, forgery, and the use of false documents.

    They pleaded not guilty.

    While delivering the judgment, Justice Mojisola Dada held that the EFCC had successfully proved its case.

    Dada held that the evidence presented by the prosecution was compelling and proved the charge against the convicts.

    According to her, the actions of the convicts not only defrauded the government of Nigeria but also undermined the integrity of the country’s oil subsidy programme.

    The judge thereafter convicted the duo and consequently sentenced them to 14 years’ imprisonment each on all the counts.

    The court also ordered the forfeiture of identified assets and accounts linked to the fraud.

    Dada also issued a warrant for the arrest of both Oluwaseun Ogunbambo and Olabisi Abdulafeez, two other suspects still at large.

    During the trial, the EFCC counsel, Mr Seiduh Atteh, presented nine witnesses through whom several compelling documents were admitted into evidence against the convicts.

    The convicts testified as witnesses for the defence.

    The convicts were initially standing trial before Justice Adeniyi Onigbanjo (rtd) of the Ikeja High Court  prior to his retirement.

    The EFCC submitted that the convicts committed the offences sometime in 2011.

    The commission stated that the duo fraudulently obtained the sum of N1.9 billion from the Federal Government, claiming the sum represented subsidy accruing to Nasaman Oil Services Ltd under the Petroleum Support Fund.

    The EFCC said the defendants claimed the sum was for the importation of 20,492,982.50 litres of Premium Motor Spirit (PMS).

    The anti-graft agency stated that the defendants also claimed that the PMS, which Nasaman Oil Services Ltd purported to have purchased from SEATAC Petroleum Ltd of the British Virgin Islands, was imported into Nigeria.

    The commission said the representation the defendants made was false.

    The EFCC also affirmed that the convicts presented forged documents, including a falsified “Gasoline Analysis.”

  • Wake up Nigerians – Another N7.74 trillion fuel subsidy fraud is here – By Godwin Etakibuebu

    Wake up Nigerians – Another N7.74 trillion fuel subsidy fraud is here – By Godwin Etakibuebu

    The news broke just a few days ago that the Downstream price war between the Dangote Refinery and the Federal Government owned Four Refineries – Port Harcourt Refineries [they are two there], Warri Refinery and the Kaduna Refinery, being operated on behalf of the latter by the Nigerian National Petroleum Corporation Limited, have pushed government fuel price further down to N774 per litre. 

    This became good news to Nigerians, and most of us celebrated it. Of course, who wouldn’t celebrate, since the Dangote Refinery, which is the alternative source of Premium Motor Spirit [PMS]; popularly known as fuel or petrol, supply to the Nigerian Market was selling at N860 per litre at the time the “good news of price reduction” came from the government.  

    However, that joy of celebration ought not to be, if facts of realities at play in the Nigerian petroleum industry are laid bay before the Nigerian People. I will say a few things quickly here that will enable us to understand why we shouldn’t have been rejoicing about the reduction in price by the NNPCL. 

    One, while Dangote Refinery refines Crude into PMS – and other products, at its Refinery, at Ibeju=Lekki in Lagos State, NNPL imports finished Petroleum product- PMS, from abroad, as it lacked full refining capacity.

    Two, every litre of fuel imported from abroad by the NNPCL is through licences issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority [NMDPRA] to the Importer. It means the Importer imports on behalf of the NNPCL, and the NNPCL does all its operation on behalf of the Federal Government, exercising such “Power of Functions” under the Supervision of a Minister of Petroleum Resources, appointed by the President of the Federal Republic of Nigeria.

    Ultimately ipso facto, the President of the Federal Republic of Nigeria controls, with Full and Totalitarian Power of Authority, everything in the Nigerian Petroleum Industry – NNPC inclusive. 

    Not even the Petroleum Industry Bill [PIB] that brought the registration of the NNPC, at the Corporate Affairs Commission [CAC], that now makes it a Limited Liability – which is a mere legal jargon nomenclature, changed the true position of things for the NNPCL.

    The point being made here is that both the NNPCL and the Federal Government are same of the same face of the same coin – finito cascara.

    Now, let us go back to the issue of price reduction competition between the NNPCL and the Dangote Refinery, please.

    There are events that happened within the past two weeks that revealed the fraudulent presentations of the NNPCL over the “so-called price reduction”, which has shown very clearly how the NNPCL and the Federal Government, in an unholy conspiracy, have brought back regime of Fuel Subsidy. And this time around Nigeria is being expected to pay Fuel Subsidy of almost Eight Trillion Naira [N8tn]. When The Guru says Nigeria, he meant that Nigerians would pay for this monumental fraud of oil subsidy, introduced through the backyard.

    I must allow you to go through NNPCL personal presentation on how it incurred the sum of N7.74tn fuel subsidy debt, at a forum, that held about two weeks ago, which was widely reported by both the National and International Medial. Same is presented here below, under the caption:                                                                                                            xNNPCL work out N7.7tn fuel subsidy debt payment.

    The Federal Government’s indebtedness to the Nigerian National Petroleum Company Limited as exchange rate differential (subsidy) for the importation of Premium Motor Spirit (petrol) rose to N7.74tn as of September 2024 when the deregulation of the downstream oil sector was fully implemented.

    This amount covers the cost of maintaining a specific price range in the retail market, despite acquiring the product at a higher rate between June 2023 and September 2024.

    This was disclosed in a presentation by the national oil company to the Federation Account Allocation Committee at its February meeting in Abuja. The Guru obtained a copy of the document.

    The FAAC document also revealed that the government is working out measures to settle the N7.74tn fuel subsidy debt within a period of 210 days.

    The PUNCH Newspaper reported in August last year that the NNPCL demanded a refund of N4.71tn from the government to settle outstanding debts used to import petrol.

    The claim, at the time, was listed as “Exchange rate differential on PMS and other joint venture taxes” on products imported by the company between August 2023 to June 2024.

    Exchange rate differentials refer to the income accrued to banks or government agencies from the difference in value between two currencies at different times through foreign exchange’s sale and purchase prices.

    For example, if one exchanges $1 for N1,600 today, and tomorrow you get $1 for N1,500, the exchange rate differential is the change between these two rates.

    The government supported fuel imports by covering the difference between the projected rate and the actual expenses incurred by the NNPCL for importing petroleum products into the country.

    This difference in cost, which ordinarily should be reflected in the retail price of the product and borne by final consumers, is the amount the national oil firm now seeks to recover from the government.

    An analysis of the document explained that the exchange rate differential for the period of July to September 2024 was estimated based on the Nigerian Autonomous Foreign Exchange Market rate.

    “Thus, the actual differentials may change in line with the prevailing forex (foreign exchange) rate at the time of import settlements.”

    The balance brought forward is the additional claim due to the actualisation of an estimated portion of 2017 to May 2023 PMS under-recovery.

    A breakdown showed that the total sum of the exchange rate differential due was N10.499tn, but N2.756tn was the exchange rate differential recovered between November 2023 and September 2024. This reduced the cumulative outstanding amount to N7.74tn.

    The document further remarked that the weighted average of purchased USD as of February 7, 2025, was applied. It added that payment is ongoing within 210 days.

    A month-by-month breakdown indicated that the debt with an outstanding balance of N1.29tn increased to N1.402tn in June 2023, N1.48tn in July 2023, N1.535tn in August, N1.59tn in September, and N1.81tn in October 2023.

    By November, these claims increased by N662.9bn to N2.378tn, and by another N616.38bn to N2.94tn in December 2023.

    The document further indicated that the figure increased to N3.57tn in January 2024, N3.96tn in February, N4.68tn in March, N5.81tn in April, N6.47tn in May, and N6.97tn as of June 2024.

    In July 2024, it increased to N7.46tn, N7.66tn in August, and N7.74tn in September 2024. The amount represents 14.07 per cent of the N54.99tn 2025 national budget. On May 29, 2023, during his inauguration, President Bola Tinubu publicly declared that “subsidy is gone,” signalling the end of barriers that had been restricting the nation’s economic growth.

    The International Monetary Fund, the World Bank, and other authoritative figures had argued that the government quietly reintroduced fuel subsidies. In June, a proposed economic stabilisation plan document stated that the government planned to spend about N5.4tn on fuel subsidies.

    An Energy Expert, Wunmi Iledare, was quoted as asking why the national oil firm was asking the government to cover its differentials when NNPCL sold oil in foreign currency on the government’s behalf. According to him, the NNPCL was supposed to pay royalties to the government like other oil companies.

    “If you look at the taxes paid by the international oil companies, they are tax oil which NNPCL sells on behalf of the government and gives the government the dollar. So, it is very difficult for me to understand why the Federal Government has to return any money to NNPCL.

     “Unless NNPCL is saying that it is the one funding the government in dollar equivalent, and since the government is changing the exchange rate to the tune of N1,500, the government cannot keep the windfall profit because the government now has more than when the exchange rate was N700,” Wunmi Iledare stated.

    The scholar added, “It is very difficult for me to comprehend the rationale because the government is the owner of the equity, the government owns the tax oil, and the government is the owner of the royalty oil that the NNPCL is selling on its behalf.

    “If the argument is about what they call under-recovery, that means NNPCL spent dollars on behalf of the government to import fuel, and the government is giving them the under-recovery in Naira, which I am not sure of. It is very complicated to understand. By the way, the Federal Government is not necessarily the owner of NNPCL. It is the federation that is the owner of the NNPCL.”

    Can you see now, in 2025, the fraud of fuel subsidy, which “ended in Nigeria on May 29, 2023, with a Presidential proclamation?”  

    As it was in the beginning, so it remains in a Nigeria without end! But I cannot say Amen.

  • Borno govt to pay fuel subsidy for 5,000 farmers

    Borno govt to pay fuel subsidy for 5,000 farmers

    The Borno government has announced plans to subsidise fuel at N600 per litre to 5,000 farmers in communities hit by Boko Haram insurgents in the state.

    Gov. Babagana Zulum announced this  during the flag-off of distribution of farm inputs to prospective farmers resettled by his  administration in Bama and environs on Friday night.

    Bama was among the areas overrun by Boko Haram insurgents in 2014 but was liberated by the Nigerian military in March 2015.

    The governor was on a two-day tour of the local government Area to facilitate the resettlement of people displaced from Bama and environs due to insurgency.

    Zulum had earlier visited Abbaram town, a village located in the Eastern part of Kur Mohammed military barracks where his administration plans to construct 1,000 shelters for the returnees.

    He also visited Darajamal to assess the destruction caused by Boko Haram insurgents there.

    Speaking after the visitation  the governor said that one of the major challenges facing irrigation farmers in the area was the rising cost of petrol.

    “As a result, I want to announce to the general public that the state government will procure petroleum products and sell to the farmers at a subsidised rate.

    “Currently petrol is being sold in Maiduguri at N1,200 per litre but inshaa Allah (God willing), henceforth for irrigation farmers this season a litre of petrol will be sold at N600.

    “The Commissioner for Agriculture will work with the Brigade Commander to ensure the delivery of the petroleum products to farmers in Bama town as soon as possible,” Zulum said.

    According to him, the planned fuel subsidy was designed to cushion the effects of high cost of farming activities.

    He said there was the need to support the vulnerable in an effort to fully reintegrate them into the society without any form of discrimination.

    The governor also gave 2,000 bags of NPK fertiliser, 1,000 units of water pumps, and 620 units of gasoline pumps to the farmers for free.

    The governor also distributed 380 units of solar water pumps, 1,000 units of sprayers, 800 rolls of 2-inch flexible hose, and 1,000 litres of pesticide and seedlings to the farmers.

    He said that the incentives would propel Agricultural productivity and prepare the farmers to be employers of labour in the near future.

    Earlier, the Shehu of Bama, Dr Umar Elkanemi, thanked the governor for the love and care he has been showing to the people of Bama in particular and the Borno people in general.

    He assured the governor that his laudable investments in Bama and the surrounding communities would not be in vain.

    Zulum was accompanied by the Senator representing Borno Central, Sen. Kaka Lawan, and members of the House of Representatives from the area.

  • No regret removing fuel subsidy – President Tinubu

    No regret removing fuel subsidy – President Tinubu

    President Bola Ahmed Tinubu on Monday said he had no regret removing fuel subsidy.

    The president, who stated this during his first media chat, said fuel subsidy removal was necessary to prevent the country from bankruptcy.

    Tinubu had, during his inauguration as president on May 29, 2023, announced the immediate removal of fuel subsidy, with the price of premium motor spirit (PMS) experiencing steady increase since then.

    However, the price has started coming down gradually, particularly with the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery announcing downward review of the price of the commodity.

    The president also said it was not necessary to phase the fuel subsidy removal.

    “It is part of the fear that is unnecessary. No matter how you cut it or slice it in segments, you still have to meet the bills.

    “So, cut your cloth according to your size. It is what we have to manage. Management is the issue, and we have no choice but to pull the brakes. Otherwise, we were headed for slippery slopes,” Tinubu said.

    The president said that with fuel subsidy, the country was spending what was meant for future generations.

    He was emphatic that the fuel subsidy removal was necessary to prevent smugglers from taking what belonged to Nigerians.

    “That doesn’t affect me; it affects smuggling. Plus, you have expenditures that you don’t have revenue for.

    “I don’t want to question people who have five limousines on the road. We should teach management with all our programmes. We have to manage our resources.

    “There is no way you will give out fuel and allow the entire neighbouring countries enjoy it like father Christmas,” the president said.

    NAN

  • Tinubu appraises self, says, my decision to remove fuel subsidy is yielding positive results

    Tinubu appraises self, says, my decision to remove fuel subsidy is yielding positive results

    President Bola Tiunbu has said that the removal of the oil subsidy by his administration was not to torment Nigerians but to save the country from total collapse.

    Recall the president announced the subsidy removal on the day of his inauguration on May 29, 2023, noted that the policy had been yielding positive results for the country.

    Tinubu stated this in his address at the 34th and 35th combined convocation ceremonies of the Federal University of Technology Akure Ondo State at the weekend.

    Represented by the Vice Chancellor of the University of Ilorin, Prof Wahab Egbewole, the president said his administration was not unaware of the suffering of the people but expressed assurance that there would be light at the end of the tunnel.

    Tinubu said, “As you are all aware, we took the baton of authority at a time when our economy was nose-diving as a result of heavy debts from fuel and dollar subsidies. The subsidies were meant to support the poor and make life better for all Nigerians.

    “We are all aware of the fact that the poor and average Nigerians were the sufferers of what was supposed to give them succour and improved standard of living. Unfortunately, the good life we thought we were living was a fake one that was capable of leading the country to a total collapse unless drastic efforts were urgently taken.

    “The need to salvage the future of our children and bring the country back from the brink of collapse necessitated the strategic decisions to remove the fuel subsidy and also unify the exchange rates. I am not unaware of the consequences of the tough decisions on our people.”

    Stressing that the policy has been fruitful, Tinubu stated, “The macro-economy of our dear country is improving by the day and beyond expectations. The micro-economy, which directly affects our citizens, is also taking shape gradually with positive results. We are now graduating from consumption to production economy in every facet of our human endeavours. By the grace of the Almighty God, every household will experience a better life and have brighter hope for the future.

    “The present challenges call for a high degree of patriotism and I can assure all Nigerians that there is light at the end of the tunnel. After rain comes sunshine. The brighter days are almost here. The Renewed Hope Agenda is on track, and we shall not deviate on the path of a better and greater Nigeria.

    It is in the light of the foregoing that I am glad to inform you that the results of the policies are already yielding the expected results,” he maintained.

    The president admonished the graduating students to join hands together to recover “our lost glory and virtues.”

    He condemned the exodus of youths to overseas countries in search of greener pastures, saying such action was not the solution to the country’s problem.

    “Many of our youths have chosen the supposed easy option of emigrating to the proverbial greener pastures where their citizens had rolled up their sleeves to bring their nations back from the brinks in their times of trouble. Such inclination has led to the brain drain syndrome that we now experience in all areas of our endeavours as a nation.

    “Our intellectuals and experts on whom the nation has massively invested huge resources to train in the interest of our country are migrating overseas in large numbers at a time when their services are most required at home. It is heart-rending, and the syndrome is not the solution to our problems. We are not Nigerians by accident, and I believe that the Almighty God who made us Nigerians has given us the required wisdom to turn things around for our betterment, “President Tinubu said.

  • Nigeria undergoing reset through subsidy removal- Soludo

    Nigeria undergoing reset through subsidy removal- Soludo

    The Governor of Anambra State, Prof. Chukwuma Soludo, has stated that Nigeria is undergoing a fundamental and disruptive reset with the removal of subsidies by President Bola Tinubu.

    Soludo made this remark during Veritas University’s 13th Convocation Lecture in Abuja on Thursday.

    The lecture, titled ‘Let Us Make a New Deal for Nigeria’, explored ways to address the country’s challenges.

    Soludo noted the need to transition from subsidies, which largely benefitted the urban elite, to a productive social contract that creates opportunities for all.

    He explained that the country has ended the harmful fuel, foreign exchange, and electricity subsidies.

    “We have entered a ‘muddling-through’ phase that requires careful navigation,” Soludo said.

    He stated that he benefited from free, quality education at the primary, secondary, and university levels, with subsidised meals in public universities until government funding became unsustainable.

    He acknowledged that, despite other issues, the military regimes invested in education during Nigeria’s early oil booms.

    Soludo urged Nigerians to craft a pragmatic new deal for the country, as well as an emergency national infrastructure plan, similar to the U.S. Marshall Plan used to rebuild Europe after World War II.

    He encouraged Nigerian leaders to draw inspiration from the Marshall Plan to implement public works projects, financial reforms, and regulatory changes that could transform the nation.

    He also highlighted positive signs, such as the minimum wage legislation, the draft tax reform bill, and planned cash transfers.

    He called for historic coordination between federal and state governments to ensure swift implementation of these reforms.

    Soludo urged the graduating students to actively contribute to the country’s future.

    “The future you seek is in your hands. Only those who plan can control the future, While Nigeria may not have given you much, you are expected to give more than you have received”.

    He encouraged them to participate in shaping the nation’s destiny.

    In his welcome address, the Vice Chancellor of Veritas University, Prof. Hyacinth Ichoku, praised the governor’s commitment to youth education.

    He reaffirmed the university’s dedication to providing quality education and fostering strong moral values.

    The Pro-Chancellor and Chairman of the Governing Council, Dr Matthew Kukah, raised concerns about the rise of banditry and insecurity in Nigeria, attributed to uneducated individuals.

    He emphasised the need to address this issue for the safety of future generations.

  • VIDEO: Watch Tinubu speak about fuel price with former NASS presiding officers

    VIDEO: Watch Tinubu speak about fuel price with former NASS presiding officers

    President Bola Tinubu on Friday met with former presiding officers of the National Assembly (NASS) under the aegis of the Forum of Former Presiding Officers of the National Assembly (NASS), led by Mr Ken Nnamani, former Senate President.

    TheNewsGuru.com (TNG) reports the meeting was held at the Presidential Villa, Abuja where Tinubu spoke with the former presiding officers of NASS about petroleum prices, fuel security and fuel subsidy removal.

    “When I resume, I said subsidy was gone. There was no subsidy in the budget handed over to me. I cannot be creative to look for magic lamp to create budget and ever since, we maintained that,” he said, adding: “Yes, we have fuel in the ground. Do we have the capacity to bring it up before we refine and distribute? Have we examined alternative source of energy with all that the world has given to us?”

    Watch President Tinubu address former NASS presiding officers below:

    Former NASS presiding officers express support for Tinubu’s administration

    The former presiding officers of the National Assembly on Friday expressed full support for President Bola Tinubu’s administration and its efforts to address Nigeria’s pressing challenges.  The former lawmakers, under the aegis of the Forum of Former Presiding Officers of the National Assembly, expressed the support at a meeting with Tinubu in Abuja on Friday. They were led by Mr Ken Nnamani, former Senate President.

    At the meeting at the Presidential Villa, Abuja, Nnamani, who spoke on behalf of the delegation, noted that the meeting was the president’s first official engagement with the group since his assumption of office.

    “Mr President, history has never been the burden of one man alone, but some are called to meet a special share of its challenges.  Though not of your creation, it has fallen onto you to end the pervasive insecurity across the nation, the economic downturn that has resulted in hunger and anger, infrastructural decay due to years of neglect and myriads of other national challenges.

    “As difficult as these problems are, we believe that with your experience, you can face the difficulties and surmount them.  What gives us more hope is the courage with which you handled the issue of Local government autonomy, which has won you open admiration from friends and foes alike.  We are convinced that you will dig in deeper again to eradicate these problems and restore Nigerians’ pride of place among the comity of nations,” said Nnamani.

    He added that the group had seen what elite complacency had caused nations and resolved to unite across all divides to render whatever assistance it may be called upon to offer, to contribute to nation building and ensure enduring prosperity for citizens.

    “It is in this light and in the national interest that we wish to pledge our support as you work to restore national security, build an economy that works for all and strengthen the bond of unity amongst our disparate peoples,” he said.

    Nnamani also commended the President for his trust in appointing some of their members to critical national positions, recognising their vital role in nation-building.

    Tinubu, in response, assured the former NASS presiding officers and Nigerians that his administration was focused on delivering tangible results and making a positive difference in the nation’s infrastructure, food and energy security, education and long-term economic stability.

    The President emphasised that he was not in office for personal gain but to serve the country.

    “I didn’t come to look for money and exploit the situation. I came to work. I asked for the votes, and Nigerians gave them to me,” the President, who was a former senator, told the meeting after a session of banters and handshakes with the former parliamentary colleagues.

    The meeting was attended by 16 former presiding officers, including former senate presidents, former speakers of the House of Representatives, former deputy senate presidents, and former deputy speakers of the House of Representatives.

    The President acknowledged the support and encouragement from the Forum members, irrespective of party affiliations, and implored them to continue fostering unity and camaraderie to achieve national development goals.

    Reflecting on the complex nature of legislative activities, constitutional reviews, and nation-building processes, the President expressed confidence that Nigeria could progress through collaboration and inclusiveness.

    “Regardless of party differences of the past and difficulty of the present, you still believe in me and what we all plan for this country.  I thank you very much; no one will do it better than us. I have travelled the world and seen how developed countries have done it for themselves through collaboration, inclusiveness and financial structure.  Yes, there is hardship, but how did we get here? What did we do when we had very high crude production?” asked Tinubu.

    He said past administrations neglected communities; neglected the goose that laid the golden eggs; forgot even to give citizens a good standard of living.

    “We forgot to educate our children. Go round and look at the dilapidated schools. The education environment must be decent enough for pupils to want to learn.  We can complain from now till eternity that the school enrolment is low. But did we do anything to encourage the enrolment process? We must ask ourselves because it is a matter of conscience,” he said.

    The President outlined his administration’s focus on addressing these challenges, including improving infrastructure, ensuring compliance with financial regulations, exploring alternative energy sources and providing energy security.

    “We have come a long way, and I promise we must do our best,” he said.

    He urged the former presiding officers to continue sharing their wealth of experience in nation-building and governance. He noted that they were uniquely positioned to provide “clear interpretations of where we are” to Nigerians.

  • NNPC Limited’s new nomenclature for subsidy – By Pius Mordi

    NNPC Limited’s new nomenclature for subsidy – By Pius Mordi

    By Pius Mordi

    When Muhammadu Buhari became president in 2015 he told Nigerians that subsidy for which Goodluck Jonathan was vilified when he sought a marginal increase in petrol pump price had been removed and effected a significant price increase, it did not take long before it emerged that subsidy was still being paid. No, its not subsidy. Its under-recovery, we were told.

    In his inaugural speech on May 29, 2023, President Tinubu gleefully announced that subsidy is now a thing of the past. The announcement was followed an astronomical increase in pump price of petrol and the downward spiral in the economy rolled in ever since. As in Buhari’s time, it did not take long before it emerged that subsidy was still being paid. After a prolonged period of loud silence, NNPCL finally opened up but gave us another name for subsidy.

    “It is not subsidy, it is importation shortfall”, Chief Financial Officer of NNPC Limited, Alhaji Umar Ajiya, almost swore in insisting that nobody or organisation was paid any subsidy in 2024. So from ‘under recovery’, we now have ‘importation shortfall’ as the newest nomenclature from the oil behemoth. Illogically, it came as the opaque state oil company which recently added ‘Limited’ to its name announced a net profit of N3.297 trillion at the end of the 2023 financial year in December. Great news? Not quite.

    Jiya simultaneously announced that Tinubu has approved a request by NNPC Limited to utilise the 2023 final dividends due to the federation to pay for petrol subsidy. Nothing, absolutely nothing, will be remitted into the federation account as a result of meeting the ‘importation shortfall’. Given the report that a forecast by NNPC Limited showed that the cumulative petrol subsidy bill from August 2023 will hit N6.884 trillion by December 2024, the zero remittance to the federation account will continue well beyond December. Even the earlier approved payment of 2024 interim dividends to the federation has been cancelled by Tinubu “to help boost NNPC’s cash flow.”

    In the absence of transparency in the management of the oil and gas industry, the apparently cosmetic change in NNPC’s status will not change anything. In trying to justify the cancellation of payment of the so-called dividend to the federation account, Jiya refrained from disclosing the most fundamental figure for determining the subsidy.

    “No marketer has received any money from us by way of subsidy. What has been happening is that we have been importing PMS, which has been landing at a *certain cost price* (emphasis mine) and government tells us to sell it at half price”, Jiya stated. “Certain cost price”, quantity shipped in, insurance and the final landing cost are the factors NNPCL will never reveal.

    At the point of adding ‘L’ to NNPC, it ceased to be a government parastatal but a limited liability company registered with Corporate Affairs Commission that is supposed to operate fully without government subvention, and expected to generate profit, and plough it into the federation account. If NNPC had ceased to be a parastatal but a company that accounts to its owners, the unilateral approval given by President Tinubu to pay N3.297 trillion as subsidy without consulting the other co-owners, the 36 states, and without proper certification of how the figure was arrived at is controversial and a presidential overreach.

    “The oil and gas situation in Nigeria has been shambolic. There is a complex interplay of interests in the sector. This government has been paying subsidy.  The  refineries that are not working have made the situation convoluted. The landing cost of petrol today is over N1,000 per litre while the pump price is less than N1,000 because of subsidy. This is a loss position already to NNPCL”, Mr. Emmanuel Odiaka, a downstream operator, says.

    “The government is not helping matters with the comatose refineries that have become a cesspit of corruption, spending billions on turn-around  maintenance every year without achieving any result. The refineries have to be operational, Dangote Refinery has to fully come on stream, and there should be considerations for modular refineries  with the right market dynamics before we can heave a sigh of relief. Otherwise,  NNPCL will continue  to be in dire straight, and the fuel supply crisis will continue to bite harder”, Odiaka added, insisting that the nightmare is just beginning.

    What has been unravelled is that the much vaunted claim that Tinubu has removed petrol subsidy is a charade, the product of utter planlessness from the point the proclamation was made on inauguration day. It has become a rudderless and horrendously expensive adventure that has plunged the national economy into a cliffhanger.

    As Chiedozie Ugbechie, an engineer, pointed out, “if such decisions were taken under President Jonathan, they would have put pressure for his impeachment. Recall how the governors loyal to Tinubu and the then ACN took Jonathan’s government to court for daring saving some money under the excess crude account. Tinubu does not have power to take such a decision he just did. It’s quite an overreach and an impeachable offence. But the National Assembly has lost its independence and does not realise that it is co-equal arm of government with the quality of its leadership it has”.

    In the absence of true transparency in the management of the oil industry, it is doubtful there will be any silver lining even when the announced decision to sell crude oil to Dangote Refineries as well as the modular refineries in Naira begins in October. If NNPCL continues importing refined products and declare whatever it likes to federal government with express acquiescence of Aso Rock, it can only get worse. With perennial failed promises to rehabilitate its four refineries, NNPCL has effectively become a trading company specialising only in the importation of petrol on its own terms as a sole importer. And its regaling in it.

  • Return of fuel subsidy: FG instructs NNPC not to sell petrol beyond regulated price

    Return of fuel subsidy: FG instructs NNPC not to sell petrol beyond regulated price

    The federal government has instructed the Nigerian National Petroleum Company (NNPC) Limited not to sell Premium Motor Spirit (PMS), also known as petrol, above “a certain regulated price”.

    TheNewsGuru.com (TNG) reports this is contained in the audited financial statements of NNPC Limited released on Monday for the year ended 31 December 2023.

    Since the Nigerian government-owned oil company made the release, the audited financial statements of NNPC Limited for the year ended 31 December 2023 has become a subject of public discourse.

    NNPC in the financial statements noted that the cost of importing PMS is usually much higher than the regulated price and that the cost incurred as the energy supplier of last resort for energy security reasons, and all associated costs, shall be on the federation’s account.

    Stressing that this is in line with Section 64(M) of the Petroleum Industry Act (PIA) 2021, NNPC Limited explained in the financial statements that the difference between the actual landing cost of the product and the regulated price is known as under recovery.

    “In line with Section 64(M) of the Petroleum Industry Act (PIA) 2021, the cost incurred by NNPC Limited (Group) as the energy supplier of last resort for energy security reasons, and all associated cost, shall be on the account of the Federation.

    “The government instructed that NNPCL cannot sell its Premium Motor Spirit (PMS) above a certain regulated price. However, the cost of importing this PMS is usually much higher than this regulated price.

    “The under recovery is essentially the difference between the actual landing cost of the product and the regulated price. This balance is used to reduce the cost of sales of the Group. The corresponding entry is either used to reduce the liability due to the Federation or used as a receivable from the Federation.

    “Premium Motor Spirit (PMS) cost under recovery is recognised where there is reasonable assurance that it will be received and all attached conditions have been complied with. When it relates to an expense item, they are deducted in reporting the related expense in cost of sales,” the company stated.

    This translates to mean NNPC Limited buys petrol at a certain amount, sells it to marketers half of that amount, and on the instruction of the federal government, tells the marketers (market regulation) not to sell beyond a certain price. Meanwhile, the NNPC had said the market is fully deregulated.

    Checks carried out by TNG on the audited financial statements released by NNPC Limited reveal PMS under recovery and energy security expenses grossing N3 trillion for the year ended 31 December 2023.

    According to NNPC Limited, energy security expenses are expenses incurred by the group in fulfilling its obligations as the supplier of last resort for energy security purposes on the account of the federation in line with the provisions of Section 64(m) of the Petroleum Industry Act, 2021.

    “These amounts are receivable to the Group as they are defrayed and charged against amounts due to Federation on a monthly basis,” the company stated.

    Meanwhile, a forecast by NNPC Limited had shown that the cumulative PMS under recovery from August 2023 will hit N6.884 trillion by December 2024.

    Further checks reveal that as of the end of December 2023, the Nigerian government was yet to defray the sum of N4.8 trillion to NNPC Limited. The government has only defrayed the sum of N649.4 billion.

    “The total undefrayed cost is made up of January to May under recovery of N3.3 trillion and August to December energy security expense of N1.8 trillion,” NNPC Limited noted in the financial statements.

    However, the Chief Financial Officer of NNPC Limited, Alhaji Umar Ajiya had explained that no marketer has received any money from the company by way of subsidy, stressing that “no one has been paid kobo by the NNPC Limited in the name of subsidy”.

    Ajiya said: “No marketer has received any money from us by way of subsidy. What has been happening is that we have been importing PMS, which has been landing at a certain cost price and government tells us to sell it at half price.

    “So the difference between the landing price and that half price is what we call shortfall. And the deal is between the Federation and NNPC Limited. To reconcile, sometimes they give us money. So, there is no money exchanging hands with any marketer in the name of subsidy”.

    Nevertheless, what is obvious is that the Nigerian government is not selling petrol at the real market price determined by the landing cost. Whether it is “under recovery” as captured by the financial statements released by the NNPC Limited or “importation shortfall” as disclosed by Alhaji Ajiya, the government is yet subsidising the price of fuel.

    Although President Bola Tinubu announced the removal of fuel subsidy during his inaugural address on May 29, 2023, there is now strong indications that the government still spends billions on subsidy. However, the federal government had consistently denied this.

    From the financial statements and the subsequent comments by the CFO of NNPC Limited, the FG no longer makes fuel subsidy payments to oil marketers, but the exchange is now between the Nigerian government and the national oil company. Although the federal government still needs to come out clean with the new subsidy regime.

    TNG reports the landing cost of petrol as of the end of July 2024 was N1,100 per litre, excluding the additional costs of transporting the product to retail outlets. The official pump price of petrol is about N600/litre.

    Experts in the energy industry have argued how the increasing landing cost of petrol may lead to an upward adjustment of pump prices by marketers.

  • Nothing like fuel subsidy, we’re simply paying shortfall on behalf of Nigerians-NNPCL

    Nothing like fuel subsidy, we’re simply paying shortfall on behalf of Nigerians-NNPCL

    The Nigerian National Petroleum Company Limited (NNPC Ltd.) has clarified that it has not paid fuel subsidies to any entity for the past nine years.

    This statement was made by Umar Ajiya, the Chief Financial Officer of NNPC Ltd., on Monday, August 19, during an address to the press.

    Ajiya emphasized that the company’s financial dealings regarding Premium Motor Spirit (PMS) have been limited to addressing importation shortfalls between NNPC Ltd. and the Federation.

    He firmly denied that any subsidies had been paid to marketers or other entities, stating, “In the last eight to nine years, NNPC Ltd. has not paid anybody a dime as subsidy.

    No one has been paid a kobo by NNPC Ltd. in the name of subsidy.” Advertisement – 6 He further explained that NNPC Ltd.’s role in PMS importation involves managing the difference between the landing cost of the fuel and the price mandated by the government for sale within the country.

    This difference, referred to as a “shortfall,” represents the gap between the actual cost of importing PMS and the reduced price at which it is sold domestically.

    “The NNPC Ltd. has only been importing PMS, which has been landing at a certain cost price, and the government mandates us to sell it at half price,” Ajiya noted. He added, “So the difference between the landing price and that half price is what we call a shortfall. The deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”

    This clarification comes amid ongoing discussions and concerns about the status of fuel subsidies in Nigeria, as the country continues to grapple with the economic implications of subsidizing fuel prices.

    This difference, referred to as a “shortfall,” represents the gap between the actual cost of importing PMS and the reduced price at which it is sold domestically.

    “The NNPC Ltd. has only been importing PMS, which has been landing at a certain cost price, and the government mandates us to sell it at half price,” Ajiya noted. He added, “So the difference between the landing price and that half price is what we call a shortfall.

    The deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.” This clarification comes amid ongoing discussions and concerns about the status of fuel subsidies in Nigeria, as the country continues to grapple with the economic implications of subsidizing fuel prices.