The latest figures stated in the financial and operations report of the Nigerian National Petroleum Corporation (NNPC) have shown that an under-recovery of N5.348bn was made by the oil firm in June this year.
The Federal Government through the Petroleum Products Pricing Regulatory Agency (PPPRA) officially commenced a petrol pricing regime on March 19, 2020 that saw to the halt in petrol subsidy. However, the under-recovery declared by the NNPC is the losses incurred by the oil firm as a result of the difference between the subsidised price at which the corporation sells petrol and the price which it should have received to meet its production cost.
Through its pricing regime, the PPPRA ensured that petrol prices were fixed on a monthly basis in accordance with the fluctuation of crude oil prices in the market. But data contained in the latest June 2020 financial and operations report of NNPC showed that the corporation incurred N5.348bn as subsidy on imported petrol in June.
According to oil marketers, NNPC is the major importer of petrol into Nigeria. In fact, the corporation was the sole importer of the commodity before March 19, 2020 and in January, February and March 2020, it incurred N43.31bn, M20.68bn and N37.66bn respectively as under-recoveries. Zero under-recovery was posted in the months of April and May 2020, based on receipts and payments for the months.
In the month of June 2020 however, over N5bn is incurred as under-recovery This development showed it spent that much on petrol subsidy in that month. In April this year, the Group Managing Director, NNPC, Mele Kyari, hinted at a possible deregulation of the downstream oil sector. He said the Federal Government had eliminated subsidy and under-recovery in the industry.
The Group General Manager, Group Public Affairs, Division, NNPC, Kennie Obateru, explained that the return of under-recovery in June was due to the payment for stock held by marketers at the onset of the removal of subsidy by the Federal Government.