Malam Mele Kolo Kyari, Group Managing Director of NNPC

How NNPC incurred N5.35bn as petrol subsidy June 2020: Top Official

*Return of under-recovery in June due to payment for stock held by marketers following removal of subsidy by Federal Government ─Kennie Obateru, Group General Manager, Public Affairs

Isola Moses | ConsumerConnect

The Nigerian National Petroleum Corporation (NNPC), in the latest figures, has revealed that the state oil firm made an under-recovery of N5.348bn June 2020.

Under-recovery is the losses incurred by the oil firm due to the difference between the subsidised price at which the corporation sells petrol and the price which it should have received to meet its production cost.

The Federal Government through the Petroleum Products Pricing Regulatory Agency officially commenced a petrol pricing regime March 19, 2020, that saw to the halt in petrol subsidy.

The PPPRA through its pricing regime ensured that petrol prices were fixed on a monthly basis in accordance with the fluctuation of crude oil prices in the market.

It was gathered that the data contained in the current financial and operations report June 2020 of the NNPC, however, indicated that the NNPC incurred N5.348billion as subsidy on imported petrol in June.

According to oil marketers, the NNPC is a major importer of petrol, and sole importer of the product prior to March 19.

The Punch findings also showed that in January, February and March of the year, the oil corporation spent N43.31bn, M20.68bn and N37.66bn respectively as under-recoveries.

The NNPC, nonetheless, posted zero under-recovery in April and May 2020, based on receipts and payments for the months.

It however, expended over N5billion as under-recovery, a development that showed it spent that much on petrol subsidy in that month, report said.

Malam Mele Kolo Kyari, Group Managing Director (GMD) of NNPC, April 2020, had hinted at a possible deregulation of the downstream oil sector

Kyari said the Federal Government had eliminated subsidy and under-recovery in the industry.

Kennie Obateru, Group General Manager, Public Affairs Division of the Corporation, also explained that the return of under-recovery in June was due to the payment for stock held by marketers at the onset of the removal of subsidy by the Federal Government.

Obateru said: “Since the subsidy removal started with reduction in pump price, marketers have been paid the differential of the PPPRA verified stock they held and it is spread over a period of six months.”

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