NNPC backs Tinubu on fuel subsidy removal, to develop implementation framework

The Nigeria National Petroleum Company (NNPC) Limited has backed the decision of President Bola Tinubu to remove the subsidy on Premium Motor Spirit (PMS), noting that it is a welcome development.

The Group Chief Executive Officer (GCEO) of the NNPC, Mr. Mele Kyari stated this during a press briefing shortly after the pronouncement by Tinubu.

Tinubu had in his inaugural speech at the Eagles Square abolished fuel subsidy in Nigeria, saying it is no longer sustainable

He had said, “On fuel subsidy, the budget I met before I assumed office and what I heard is that there is no provision for subsidy. Fuel subsidy is gone.”

Reacting to the development, Kyari said the subsidy burden which has been placed on the NNPC Limited is affecting the company’s cashflow and threatening its sustainability plans due to the federal government’s inability to refund the subsidy claims.

He added that NNPC as a limited liability company cannot continue to bear the burden of subsidy on behalf of the federation if it must deliver dividends to its shareholders and be profitable.

He said, “We welcome the decision of the president to announce the removal of subsidy on PMS and this has been the major challenge for NNPC operations.

“We have been funding subsidy from the cash flow of the NNPC since government is unable to defray the cost of subsidy for the federation. We believe that this will free resources for the NNPC to continue to do the great work that this company is doing for our country and it allows us to continue to function as a commercial entity.”

Kyari assured that the company has over 30 days of PMS storage and supply and appealed to Nigerians not to indulge in panic buying.

He stated further that the company is in discussion with the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to develop a framework of the implementation of the removal of the PMS subsidy as announced by the President.

He further added that the company as the supplier of last resort as mandated by the Petroleum Industry Act (PIA) will continue to ensure availability of PMS and other petroleum products.

The Federal Government had in the last few months been taking steps to stop the payment of fuel subsidy by the end of June this year.

In the 2023 budget, the federal government had made provisions of N3.36trn for fuel subsidy payment to cover the first six months of this year.

This is in line with the 18-month extension announced in early 2022 by the government.

The immediate past administration of former President Muhamadu Buhari had set up a Subsidy Removal Committee which comprises the Ministry of Finance, Budget and National Planning, Ministry of Petroleum Resources, Nigerian National Petroleum Company (NNPC) Limited, the downstream and upstream regulators, Central Bank of Nigeria (CBN) and the Chief Economic Adviser to the President.

The 2023 Fiscal Framework and Appropriation Act as well as the Petroleum Industry Act (PIA) have made the provision that government should exit fuel subsidy by June 2023.

Kyari had during the inauguration of Dangote Refinery last week stated that the lingering challenge of Petroleum Motor Spirit subsidies is becoming unbearable as the burden is clearly getting out of the capacity of the state to bear.

He gave the monthly fuel subsidy burden at about N400bn monthly, adding that something needs to be done urgently to stop the spending.

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