The Nigerian National Petroleum Company Limited (NNPCL) has requested a refund of N2.6 trillion for foreign exchange differentials related to fuel imports between August 2023 and June 2024.
Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, revealed this in the minutes of the Federation Accounts Allocation Committee’s June meeting.
Due to the recent spike in foreign exchange, which reached N1593.62 per dollar as of Thursday, NNPCL’s claim had risen to N4.71 trillion by June 2024, according to a company document.
Edun informed state finance commissioners that NNPCL had received presidential approval to use a “Weighted Average Rate” for fuel imports from October 2023 to March 2024.
Joshua Danjuma, General Manager of the FAAC office at NNPCL, further clarified that the claimed amount was intended to cover the landing cost of PMS (Premium Motor Spirit).
“Reacting to the issue of the N2.6tn claim of NNPC Ltd against the Federation, the representative of NNPC Limited confirmed that the figure had increased significantly as of May 2024 due to the change in the rate at which the company was sourcing for the Forex to pay for the landing cost of PMS”, he said.
The minutes read, “NNPC Limited Exchange Rate Differentials on PMS Importation and Other Joint Venture Taxes for the period August 2023 to April 2024.
“The chairman, PMSC (Post Mortem Sub-Committee) reported that NNPC Limited informed the sub-committee that it had an outstanding claim of N2,689,898,039,105.53 against the federation as a result of the use of ‘Weighted Average Rate’ as of May 2024.
“Furthermore, he disclosed that the sub-committee was able to establish that there was Presidential approval to use the ‘Weighted Average Rate’ from October 2023 to March 2024.”
It was learned that the National Economic Council granted NNPC permission to import fuel at an exchange rate of N650 to $1 at retail coastal pump prices starting in June 2023. However, due to the naira’s devaluation, this rate surged to N1,200, resulting in an exchange rate differential of N550.
A month-by-month breakdown of NNPC’s N4.7 trillion claim shows that the debt, with an outstanding balance of N1.18 trillion, rose to N1.24 trillion in August 2023, N1.3 trillion in September 2023, and N1.51 trillion in October 2023. By November, the claims increased by N570 billion to N2.08 trillion, and by another N550 billion to N2.63 trillion in December 2023.
The figures further indicate that the claim rose to N3.19 trillion in January 2024, N3.29 trillion in February, N3.55 trillion in March, N4.02 trillion in April, N4.29 trillion in May, and N4.71 trillion by June 2024.
This development contradicts the statement by the Minister of Petroleum Resources (Oil), Heineken Lokpobiri, that the fuel subsidy remains removed.
Recall that in June 2023, President Bola Ahmed Tinubu announced the removal of the fuel subsidy.
In a recent interview, the Minister of Finance confirmed that fuel subsidy payments are not included in the 2024 budget.
However, the International Monetary Fund and the World Bank suggested that the Nigerian government has reintroduced fuel subsidies.
Recently, former President Olusegun Obasanjo told the Financial Times in an interview that fuel subsidies have returned in Nigeria due to inflation.
In July 2024, the Major Energies Marketers Association of Nigeria stated that with a landing cost of N1,117 per liter for PMS, the monthly subsidy on the commodity had risen to approximately N707 billion.
Similarly, the Independent Petroleum Marketers Association of Nigeria (IPMAN) warned that Nigeria’s fuel subsidy expenditure could exceed N700 billion monthly.
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