The Nigerian National Petroleum Corporation (NNPC) reportedly paid N5.34 billion ($14 million) for fuel in June, months after it changed its pricing method in order to remove subsidies.
According to Reuters, NNPC detailed the “under recovery” bill in its June monthly statement, a term used to describe money lost through fuel sales.
NNPC Spokesman, Kennie Obateru said the costs represented temporary payments to marketers, who purchase imported fuel and then sell it on, for stocks held by them when the subsidy was removed, and would be spread over half a year.
“Since the subsidy removal started with reduction in pump price, marketers have to be paid the differential of the (government) verified stock they held,” he told Reuters.
In March, in the middle of a global oil crash, Nigeria slashed its petrol pump price and declared it had eliminated subsidies by means of a new price cap that maintained government control, but allowed prices to move with the market.
Petrol prices in the country had been kept artificially low at N145 per litre. A study backed by the British government estimated that Nigeria spent N10 trillion on subsidies from 2006 to 2018, dwarfing individual budgets for health, education or defence.
The Petroleum Products Pricing Regulatory Agency, which is tasked with fixing pump prices, has not published retail prices since 31st March. Fuel importers said a monthly depot price is in place, but it is not widely distributed.
The absence of transparency around the new petrol pricing mechanism has remained a point of contention for those monitoring whether the subsidy cost has been permanently removed and is one of the sticking points over a much-needed World Bank.
KanyiDaily recalls that the Managing Director of NNPC, Mele Kyari had said that the era of subsidy on petrol is gone forever in the country.
According to him, the current fluctuations in global crude oil prices, the cost of refined products would be determined by market forces going forward.