FG's outstanding subsidy debt to NNPCL hits about ₦7.3 trillion

A fresh report has revealed the federal government’s outstanding subsidy indebtedness to the Nigerian National Petroleum Company Limited (NNPCL) is about ₦7.3 trillion ($9.74bn).

The increased amount is due to the naira devaluation, which officially exchanges at ₦734 per dollar.

According to sources familiar with the case, the NNPCL owes about ₦2.8 trillion to the federal government and the FG in turn, owes the NNPCL almost ₦4.1 trillion so it was therefore argued that the FG should actually make payment for the debt balance of ₦1.3trn owed NNPC Limited.

Recall the Nigeria Extractive Industries Transparency Initiative (NEITI), had recently disclosed that the NNPC, before it transitioned into a commercial entity, had failed to remit the sum of $1.9 billion to the Federation Account Allocation Committee (FAAC).

Before the official removal of the petroleum subsidy, the NNPC was the sole petroleum importer and also depended on the FG for operational funding.

Following the inability of the federal government to bear the heavy cost of subsidy payments, President Bola Tinubu had on May 29 2023, announced the removal of petrol subsidy thus cutting off the huge obligation of spending over ₦400 billion monthly on subsidy payments.

In order to find a lasting resolution to the debt issue across the concerned organisations, the President had set up an inter-agency committee to resolve the lingering crisis between the affected entities.

Named as part of the committee are representatives of the Ministry of Finance and NNPC Limited. Other members of the debt reconciliation committee include the Nigerian Upstream Regulatory Commission (NUPRC), Federal Inland Revenue Service (FIRS), Office of the Accountant General of the Federation (OAGF) and FAAC Post-Mortem Sub-Committee.

Part of the mandate handed over to the committee was to reconcile the controversial ₦4.1 trillion debt the Federal Government owes the NNPC Limited and also, the ₦2.8 trillion debt which the NNPC Limited failed to remit to the federation account.