The Chief Financial Officer of the Nigeria National Petroleum Company Ltd, Alhaji Umar Ajiya has revealed that the government compensates the company for selling PMS at half the landing cost, a term he refers to as the “shortfall.”
The C.F.O., provided this clarification on Monday in Abuja while presenting the company’s 2023 full-year result where it recorded profits of N3.3 trillion, according to Nairametrics.
According to Ajiya, for the previous nine months, NNPC Ltd. has not given any subsidies to marketers; instead, it has only been in charge of handling the gap in Premium Motor Spirit imports between the corporation and the federation.
He stated, “In the last eight to nine months, the NNPC Ltd., has not paid anybody a dime as subsidy, no one has been paid kobo by the NNPC Ltd. in the name of subsidy. No marketer has received any money from us by way of subsidy.
“What has been happening is that we have been importing PMS, which has been landing at a certain cost price and the government tells us to sell it at half price.
“So the difference between the landing price and that half price is what we call shortfall. And the deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”
The CFO explained that credit lines are common in the downstream sector as part of the global commercial system, noting that the company previously had an open credit arrangement with PMS suppliers, which included term line agreements for payment.
Also, the Executive Vice President of Downstream at NNPC Ltd., Dapi Segun emphasized that the national oil company’s credibility, which it has developed over time, is further demonstrated by the development of an open credit agreement with suppliers.
He stated, “Concerning the outstanding to the suppliers, it is not in that magnitude that has been put out, it is actually lower than the $6.8 billion. What matters really is the relationship between us and our suppliers to ensure that we keep faith in making these payments to our suppliers which we have done over time.
“You would understand that it is not a static figure, and I wouldn’t want to be quoting any figure, when we make payments it goes down, when they supply products, it goes up.
“It is a dynamic way, but the most important thing is to ensure that we continue to make PMS available across the country.”
