Bayo Onanuga, special adviser on information and strategy to President Bola Ahmed Tinubu, says the Nigerian National Petroleum Company (NNPC) Limited admitted to having financial constraints because it can no longer subsidise petrol.
In an X post (formerly known as Twitter) on Tuesday, Onanuga said if NNPC continues to pay the differences in landing cost and petrol price, the national oil company will go bankrupt.
NNPC had earlier increased the price of petrol to N855 per litre. However, the premium motor spirit (PMS) landing cost is around N1,200.
Earlier reports on Sunday showed that the lingering petrol scarcity in many parts of the country was worsened by a $6 billion debt NNPC owed suppliers.
Hours later, NNPC admitted to owing suppliers of premium motor spirit (PMS), also known as petrol, adding that it was facing financial strain due to the petrol supply costs, and this is affecting the company’s ability to sustain PMS supply.
Prior to acknowledging the debt, NNPC had denied subsidising petrol after TheCable reported that the president approved a request by the company to utilise the 2023 final dividends due the federation to pay for the subsidy.
Speaking on the subsidy and the impact on NNPC’s finances, Onanuga said NNPC’s debt was a result of the company’s efforts to absorb rising petrol costs and protect Nigerian consumers, rather than any government deception.
“NNPC cried out recently because it can no longer sustain the price differential on its balance sheet without becoming insolvent,” he said.
“The situation has greater implications for the ability of the three tiers of government to function as the NNPC has failed to pay into the Federation Account, the money that should go to the government.
“There are no easy choices. Something must be done to make NNPC survive, and keep the engines of government running and petrol flowing at the pumps.
“That is the scenario that is unfolding, and the game changer and big relief giver may well be the Dangote refinery and other local refineries, which will become the fuel suppliers to the local market.
“When Dangote Refinery and other refineries, including government-owned Port Harcourt Refinery, come fully on stream, our country and economy will benefit on all fronts. There will be many good paying jobs that will be created along the value chain.”
Also, Onanuga said there will also be a drop in the huge demand for foreign exchange to import petroleum products.
- ‘FG Never Lied About Removing Subsidy’
Onanuga said the federal government did not lie about the removal of the subsidy.
According to the spokesperson, the federal government has been faithful to its policy of deregulating the petroleum sector.
He added that the government’s decision to remove the petrol subsidy was reflected in the 2023 supplementary budget, 2024 budget, and amended 2024 budget, where provisions for subsidy payments were absent.
“I have read a series of articles attacking the Federal Government for not telling the truth about fuel subsidy payments, following NNPC Limited’s admittance it was owing suppliers some $6 billion,” Onanuga said.
“Some of the stories have been written with relish, as the authors believed they have uncovered some scoops.
“The truth is that there is no discovery. No lie uncovered. The government has been faithful to its policy that it was no longer going to pay fuel subsidies since President Tinubu announced the deregulation of the PMS sector on 29 May 2023. Since then, subsidy provisions have disappeared from the budget.
“It was not in the Supplementary budget of 2023, not in the 2024 budget and the amended 2024 budget.
“So the giddy headlines about the so-called unraveling of the Tinubu government’s subsidy payment; and return of subsidy were not justifiable.
“Rather what has unravelled was the commendable disposition of the oil company owned by all the tiers of government to absorb the rising costs of petrol at the pump and protect the Nigerian consumer.”
Onanuga said the generous disposition of NNPC, backed by the president’s unwillingness to let the people suffer, has been under threat for months, because of the rising cost of crude and the devalued naira.
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