The Nigerian National Petroleum Company Limited (NNPCL) has formally requested the Federal Government to reimburse it a substantial sum of N4.71 trillion.
This amount represents the funds spent by the NNPCL on importing Premium Motor Spirit (PMS), commonly known as petrol, into Nigeria between August 2023 and June 2024.
The claim is based on “exchange rate differentials on PMS and other joint venture taxes,” as outlined in the minutes of the June meeting of the Federation Accounts Allocation Committee (FAAC).
This document, obtained by our correspondent, reveals the significant financial burden NNPCL has faced due to fluctuations in exchange rates, which have drastically affected the cost of importing petrol.
Exchange rate differentials occur when there is a change in the value of one currency against another over time. In the case of NNPCL, the difference between the projected exchange rate and the actual rate at which the company had to purchase foreign currency has led to substantial losses.
These losses, according to NNPCL, need to be covered by the government to ensure the continued importation of petrol into the country.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed during the FAAC meeting that NNPCL had received presidential approval to use the “Weighted Average Rate” for foreign exchange from October 2023 to March 2024.
This approval allowed NNPCL to import fuel at a rate significantly lower than the market value, but the subsequent devaluation of the Naira caused a sharp increase in the actual costs, which now stands at N4.71 trillion.
The document further shows that this figure has been steadily rising, starting from N1.18 trillion in August 2023, and reaching N4.71 trillion by June 2024. NNPCL is seeking government assistance to bridge this financial gap, a move that has sparked concerns about the true state of the nation’s fuel subsidy policy.
The minutes read, “NNPC Limited Exchange Rate Differentials on PMS Importation and Other Joint Venture Taxes for the period August 2023 to April 2024.
“The chairman, PMSC (Post Mortem Sub-Committee) reported that NNPC Limited informed the sub-committee that it had an outstanding claim of N2,689,898,039,105.53 against the federation as a result of the use of ‘Weighted Average Rate’ as of May 2024.
“Furthermore, he disclosed that the sub-committee was able to establish that there was Presidential approval to use the ‘Weighted Average Rate’ from October 2023 to March 2024.”
