NNPC pumps up petrol price from Fuel Fund

Nigeria National Petroleum Corporation (NNPC) boss Maikanti Baru yesterday told the Senate that the corporation spends $1.05billion from dividends of Liquefied Natural Gas (LNG) to augment daily shortages incurred in the pump price of Premium Motor Spirit (PMS).

Baru appeared before the Senate Ad- Hoc Committee Investigating alleged illegal application of $3.5billion petroleum subsidy by NNPC.

The NNPC Group Managing Director (GMD) denied the existence of any $3.5 billion for fuel subsidy.

He noted that $1.05bn (equivalent of N383.2bn) taken from LNG dividends is domiciled in a special account with the Central Bank of Nigeria (CBN), called National Fuel Support Fund (NFSF).

The fund, he said, is for augmenting losses incurred from petrol pump price of N145 per litre as against N185 per litre it is supposed to be.

Baru said: “Based on available parameters from landing to transportation costs, the pump price of PMS is supposed to be N185 per litre as against the official price of N145 per litre, indicating shortage of N40 per litre.

” Since subsidy is not appropriated for and pump price is not adjusted upwardly, NNPC had no other choice than to in line with its establishment Act, Section 7 sub section 4(b), defray its costs from its revenues.”

The GMD explained that the $1.05billion costs augmentation money came into being in October last year when Independent Marketers pulled out of the supply chain of importation of PMS into the country as a result of increase in landing cost without corresponding increase in pump price .

Baru said subsidy or pump price increase could best be tackled by the National Assembly and not the NNPC, failure of which, he said, will make smuggling of petroleum products across Nigerian borders, lucrative business by smugglers.

He said: “The N145 per litre pump price of PMS in Nigeria is the lowest when compared to N400 it is sold in Cameron, N350 in Ghana, N330 in Benin Republic etc.

“As long as the product is sold at the lowest price in Nigeria, so shall it be attractive for smugglers to trade on across the borders.”

Asked about the daily consumption of the product in the country, Baru said he did not know.

He however told the committee that the consumption rate as at 2016 was 49m litres per day and 53m litres per day in 2017.

He said NNPC has 1.9bn litres of PMS in stock which could last the country for 39 days in case of any breakdown in the supply chain.

Baru’ s appearance before the committee was sequel to a resolution taken by the Senate on the 16th of last month for probe into alleged warehousing of $3.5bn by NNPC for fuel subsidy through a motion moved by the Senate Minority Leader, Biodun Olujimi.

Apart from Baru, other government officials from the Ministry of Finance and the office of Auditor General of the Federation also appeared before the committee.

Committee Chairman Senator Ahmed Lawan adjourned the sitting till Tuesday.