By Michael Eboh
The Federal Government has spent N462.10 billion on under-recovery, also known as a subsidy, on Premium Motor Spirit, PMS, in nine months, from January to September 2019, according to data released on Monday, by the Nigerian National Petroleum Corporation, NNPC.
According to the data obtained from the NNPC Monthly Financial and Operations Report for September 2019, the amount incurred as a subsidy in the nine-month period was 51.51 per cent or N157.101 billion higher than the N305 billion budgeted for subsidy by the Federal Government for the whole of 2019.
The amount the NNPC spent on subsidy, on behalf of the government, for the nine-month period was 96.74 per cent of the N477.67 billion transferred by the NNPC to the Federation Account in the period under review.
Giving a breakdown of the amount paid as subsidy in the period under review, the NNPC report disclosed that in January, February, March and April, May and June 2019, N40.53 billion, N2.876 billion, N13.34 billion, N104.35 billion, N102.34 billion and N30.64 billion was recorded as under-recovery respectively.
In addition, N93.7 billion, N42.93 billion and N31.41 billion were incurred as subsidy in July, August and September 2019 respectively.
In comparison, the NNPC’s remittances to the Federation Account stood at N54.17 billion, N38.0 billion, N59.58 billion, N36.08 billion, N31.43 billion, N70.58 billion, N61.5 billion, N51.79 billion and N74.54 billion, in January, February, March, April, May, June, July, August and September 2019 respectively.
The under-recovery was incurred by the NNPC on behalf of the Federal Government. Under recovery is a situation whereby the NNPC incurs the cost of the differential between the official pump price of petrol and the actual cost of the commodity, especially as presently, the official price is lower than the actual market price.
The difference with this current system of subsidy payment is the fact that since the NNPC is currently the sole importer of PMS, also known as petrol, into the country, the corporation is making the payments to itself or deducting the amount as cost from its revenue, and not paying it to other oil marketers as was the case in past subsidy regimes.
On its financial performance for the month ended, September 30, 2019, the NNPC announced a trading surplus of N8.59 billion, rising by 65.2 per cent compared to N5.20 billion surplus posted in August 2019.
According to the NNPC, the significant increase of 65.2 per cent in September was due largely to the improved surplus posted by both the upstream and downstream subsidiaries of the NNPC; such as Integrated Data Services Limited, IDSL, Nigerian Gas Company, NGC; Nigerian Gas Marketing Company, NGMC; Petroleum Products Marketing Company, PPMC; Nigerian Pipelines and Storage Company, NPSC and Duke Oil Incorporated.
It noted that the percentage increase in the performances of these strategic business units accommodated the sharp decline in the performance of its major upstream subsidiary, the Nigerian Petroleum Development Company, NPDC, performance.
The NNPC added that the increased surplus was equally supplemented with reduced deficit posted by the refineries and the corporate headquarters.