The Nigerian National Petroleum Company Limited (NNPCL) has disclosed that the Federal Government incurred a debt of N5.1 trillion in under-recovery and energy security expenses for fuel importation in 2023. The total receivables from fuel imports, as stated in the company’s financial statement for the fiscal year ending December 31, 2023, amounted to N9.38 trillion. This figure marks a significant increase of 76.7% from the N2.18 trillion recorded in 2022.
According to the financial statement, N6.25 trillion of this amount was accrued under domestic crude oil supply, while N3.14 trillion was categorized as other receivables. The term "receivables" refers to debts owed to a company for goods or services that have been delivered but not yet paid for.
The N5.1 trillion in under-recovery and energy security expenses were described as costs incurred from crude oil supply for domestic use and other receivables. This was in line with the government's directive that NNPCL should not sell Premium Motor Spirit (PMS), commonly known as petrol, above a certain regulated price.
The NNPCL explained that under-recovery occurs when the landing cost of PMS exceeds the regulated market price, while energy security expenses are costs incurred by the company as the supplier of last resort, in accordance with the Petroleum Industry Act (PIA) of 2021.
The use of the term "under-recovery" has drawn criticism, with experts like petroleum engineer and analyst Bala Zakka accusing the NNPCL of using technical jargon to obscure the true nature of the expenses. Zakka argued that the terminology was intended to confuse and conceal information from the public.
Former Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Waiziri Adio, also criticized the NNPCL's lack of transparency. Adio, now the Executive Director of Agora Policy, a Nigerian think tank, called on the NNPCL to be straightforward in its communications with Nigerians. He expressed concern over the company's evasive language regarding the issue of fuel subsidies, which the government has consistently denied paying despite strong indications to the contrary.
Adio took to social media to express his frustration, stating that the NNPCL's explanation amounted to "a hollow attempt at deflection" and a "lame play with words" that insulted the intelligence of Nigerians.
Despite President Bola Tinubu's announcement of fuel subsidy removal during his inaugural address on May 29, 2023, the NNPCL's financial statement indicates that the government still incurs significant expenses related to fuel subsidies. The Major Energies Marketers Association of Nigeria recently disclosed that the landing cost of petrol was N1,117 per litre, leading to a monthly subsidy of N707 billion. However, the federal government continues to deny that subsidies are being paid.
Meanwhile, the NNPCL has reported a worsening scarcity of petrol across the country, with tankers stranded at depots and long queues persisting at fuel stations. The scarcity has led to a sharp increase in fuel prices, with some locations selling petrol for as much as N950 per litre.
The Chief Corporate Communications Officer of NNPCL, Olufemi Soneye, assured the public that the company is working to resolve the supply challenges, with the situation expected to improve by mid-week. However, the ongoing fuel scarcity has exacerbated economic hardships for Nigerians, as prices of essential goods continue to rise.
