Petrol subsidy reduces NNPC’s contribution to Federation Account by N13bn in September – Report
By Emmanuel Marculay
The contribution of the Nigerian National Petroleum Corporation (NNPC) to the Federation Account fell by about N13 billion in September, a document detailing the corporation’s monthly presentation to the Federation Account Allocation Committee (FAAC) has shown.
It is the second most impactful development since the national oil company failed to contribute any funds in April when it started making deductions owing to its funding of subsidy on the pump price of petrol.
The data showed that since May, the corporation’s funding of the Federation Account had Increased steadily, but dropped from N80.030 billion in August to N67.533 billion, a difference of about N13 billion.
Before the latest development, the contribution jumped from N38.608 billion to N47.1 billion between May and June and from N67.2 billion to N80 billion in August, before falling to N67.5 billion in September.
In all, the information showed that the corporation had done very badly this year in terms of its statutory funding of the Federation Account, having just been able to pay N496.8 billion, leaving a huge deficit of N1.386 trillion as at September this year.
This is out of its yearly projection of N2.51 trillion total payment for 2021 and a monthly contribution of N209.3 billion as well as a supposed year-to-date (January-September) funding to the tune of N1.88 trillion.
While Nigeria’s earnings from oil and gas sales dropped by N87.41 billion between July and August this year, the summary indicated that the total oil and gas sales in July was N271.215 billion but dropped to N183.81bn in August, representing a decrease of 32.23 per cent.
As reported earlier, the NNPC will also deduct N163.73 billion from its remittance to FAAC in the coming month, which is a combination of N123.73 billion on petrol subsidy and another N40 billion deferred deduction.
Similarly, in October, it netted off N149.28 billion from its remittances, while pipeline repairs stood at N1.67 billion, with domestic crude oil sales at N265.13 billion.
As reported earlier, NNPC deducted N149.2 billion from the federation’s joint account in October, while it withheld about N173.1 billion the previous month to pay for what it terms under-recovery or value shortfall.
From January to September, NNPC had paid N864 billion as subsidy with the eight month getting the lion’s share of N173.1 billion, while June came next with N164.3 billion, followed by May with N126 billion, then July in which N103.2 billion was spent on what the government terms under-recovery.
In the same vein, while no subsidy was paid in January, N24.3 billion was paid in February, N60.3 billion in March and N61.9 billion in April this year, while September gulped N149 billion.
When the implementation of the Petroleum Industry Act (PIA) begins in earnest and the federal continues in its hesitation to stop payment of subsidy on petrol, it will be double jeopardy for the sub-nationals which would also be hugely affected by the deduction of the controversial 30 per cent frontier exploration fund.
In all, the overall NNPC crude oil lifting of 8.71 mbbls (export & domestic crude) in July 2021 recorded 0.87 per cent increase relative to the 8.66 mbbls lifted in June 2021.
In June, the NNPC told the nation that Nigeria was losing about 42 million litres of petrol to the activities of smugglers across the country’s borders, increasing Nigeria’s estimated daily consumption of 60 million litres to 103 million litres, thereby worsening the subsidy payment regime.