Subsidy: NNPC May Deduct Over ₦1 Trilion From FAAC In Six Months
Figures obtained from the oil firm on its subsidy deductions in 2021 indicated that the amount deducted monthly from FAAC by the NNPC was higher during the periods of higher crude oil prices.
This was also confirmed by economists, who explained that the higher the international price of crude oil, the higher the amount to be deducted by the NNPC from FAAC.
They also stated that the volume of petrol consumed in a particular month was contributory to the amount being spent as subsidy, but insisted that the major factor was the global crude oil price.
As the sole importer of PMS and supplier of last resort, the NNPC ensures adequate supply of refined petroleum products by importing the commodities.
PMS is not deregulated by the Federal Government, as the price is sold at between N162 and N165/litre at filling stations, far lower than the actual cost of the commodity.
In June 2021, the Group Managing Director, NNPC, Mele Kyari, had stated that petrol price should be more than N280/litre, while the commodity had been subsidised and sold at N162/litre since last year.
The subsidy spent on each litre of petrol consumed in Nigeria is therefore recovered by NNPC through its monthly deductions from its remittances to FAAC.
An analysis of the monthly FAAC deductions in 2021, captured by the NNPC as under-recovery of PMS/value shortfall, for instance, showed that the oil company deducted N25.37bn from FAAC in February 2021 when the average price of Brent crude was $62.28/barrel.
But in June of the same year when the price of Brent climbed to $73.16, the national oil firm reported that it spent N164.33bn on subsidy in that month.
Notably, between June and November 2021, a period of six months, the oil firm deducted N888.13bn from FAAC being subsidy spent on petrol imports. This comes to about N148bn monthly on the average.
The average cost of Brent crude during the six-month period, according to figures obtained from Statistica, a global statistical firm, was put at $76.4/barrel.
However, the price of Brent has been on the rise since this year, following efforts by the Organisation of Petroleum Exporting Countries and its partners to boost the cost of the commodity.
Source:- Punch Ng
