NNPC Demands N4.71tn Refund from FG to Settle Outstanding Fuel Import Debts

The Nigerian National Petroleum Company Limited (NNPC) has requested a refund of N4.71 trillion from the Federal Government to settle outstanding debts incurred in importing Premium Motor Spirit (PMS), also known as petrol, into the country.

According to a report by the Federal Accounts Allocation Committee (FAAC), the NNPC claimed that the amount is owed to the company as a result of exchange rate differentials on PMS imports between August 2023 and June 2024.

The exchange rate differential refers to the income accrued to banks or government agencies from the difference in value between two currencies at different times through foreign exchange’s sale and purchase prices.

The report, which was obtained by The PUNCH, revealed that the NNPC used the "Weighted Average Rate" to calculate the exchange rate differential, which resulted in a claim of N2.6 trillion as of May 2024. However, the figure increased to N4.71 trillion as of June 2024.

The development has sparked controversy, with some experts questioning the basis for the NNPC’s claim. According to Professor Wumi Iledare, the NNPC is supposed to pay royalties to the government like other oil companies, and it is unclear why the government should refund the company for alleged under-recoveries.

"I would not understand the basis for the NNPC asking the government to give them money back," Iledare said. "If the NNPC is really going to follow its new status, what they need to pay to the government is royalty, Nigerian hydrocarbon tax, and corporate income tax. They need to pay the way international companies pay the government."

The NNPC’s claim is also at odds with the government’s previous claims that subsidies have been eliminated. In June, a proposed economic stabilisation plan document stated that the government planned to spend about N5.4 trillion on fuel subsidies.

The FAAC meeting, where the report was presented, also discussed the challenges faced by the NNPC in ensuring adequate supply of PMS to marketers for distribution nationwide. The meeting also highlighted the inadequacy of revenue-generating agencies to meet their revenue targets, with only 50 per cent of the budgeted revenue for the current year achieved.

The development has raised concerns about the government’s ability to manage the country’s economy and ensure transparency in its dealings with state-owned enterprises like the NNPC.