FG Reveals How They Are Still Paying Subsidy Through NNPCL | READ DETAILS

Minister of Budget and National Planning, Abubakar Bagudu, reveals that NNPCL is using fuel subsidy savings to sustain current pump prices, despite the official removal of subsidies in June 2024. This financial strategy aims to stabilize the market, but it leaves NNPCL bearing the brunt of costs.

The Minister of Budget and National Planning, Abubakar Bagudu, has disclosed that the Nigerian National Petroleum Company Limited (NNPCL) is utilizing savings from fuel subsidy removal to keep the pump price stable. Despite the official cessation of fuel subsidies in June 2024, NNPCL has been offsetting the difference between the international landing cost of fuel and the price at which it is sold in Nigeria.

Speaking on Channels Television, Minister Bagudu clarified that while the 2024 budget does not allocate funds for fuel subsidies, NNPCL has been using its resources to manage the subsidy situation. He noted that NNPCL’s contributions have been strained due to the higher cost of fuel imports compared to the domestic pump price.

“This is the crux of the issue. If NNPCL is obligated to ensure energy security, yet it is unable to contribute financially because it has to use funds to import fuel, then it is essentially absorbing the subsidy cost,” Bagudu explained.

The recent removal of subsidies led to a significant hike in fuel prices, with the pump price soaring above N600 per liter from a previous N238. This increase has sparked nationwide protests under the banner #EndBadGovernance, which calls for the return of fuel subsidies among other demands. The protests, now in their third day, are scheduled to continue for ten days.

Minister Bagudu emphasized that the government is attuned to the concerns of Nigerians and is working on reforms that align with public expectations. However, he also pointed out that the NNPCL, under the Petroleum Industry Act, operates as a private liability company with a mandate for energy security, complicating the financial dynamics.

Despite these efforts, the Major Energy Marketers Association of Nigeria has reported that the landing cost of fuel remains at N1,170 per liter, while the retail price varies from N617 to N850 per liter, depending on the region. This discrepancy highlights the ongoing financial burden faced by NNPCL, which continues to manage the cost differential.