As the Nigerian government is planning on revenue diversification to increase its income into the federation account, Nigerian National Petroleum Corporation, NNPC has hinted that its corporation cannot remit anything to the federation account in the incoming month of May.
The NNPC stated that its remittance will be zero allocation in the incoming month of May as payment for the petroleum subsidy has been projected to consume all the money.
The Nigeria oil giant stated this in a letter sent to the accountant General office yesterday and a copy which was leaked to a journalist.
The Group Managing Director, GMD of the NNPC, Mr Mele Kyari had earlier in March warned that the corporation was struggling to shoulder the burden of subsidy on Premium Motor Spirit (PMS) also known as petrol.
Though, Mr. Kyari promised Nigerians that the corporation would not increase the price of the PMS until negotiations are concluded with the labor unions and stakeholders.
According to NNPC as of the month of March, the price of petroleum would have been somewhere around N211 and N234 per liter going by the actual market price, this means that what Nigerians are currently paying does not reflect the actual amount but a subsidized amount that government is paying the remaining.
Contained in the NNPC letter sent to the Accountant General Office, the corporation stated that N111.96 billion will be deducted from April 2021 oil and gas proceeds which is due to the federation account in May, saying the deduction was for the payment of subsidy and to ensure that there is a constant supply of petroleum across the country.
Also in the letter, NNPC said, “The Accountant General of the Federation is kindly invited to note that the average landing costs for Premium Motor Spirit for the month of March 2021 was N184 per liter against the subsisting ex-coastal price of N128 per liter, which has remained constant notwithstanding the changes in the macroeconomic variables affecting petroleum products pricing,”
It continues, “As the discussions between Government and the Labour are yet to be concluded, NNPC recorded a value shortfall of N111.966,456,903.74 in February 2021 as a result of the difference highlighted above. Accordingly, a projection of remittance to the federation for the next three months is presented in the attached schedule.”
There has been a concern in the federal government corridor over dwindling revenue due for the three tiers of government with the Governor of Edo State, Godwin Obaseki, last month accused the Central Bank of printing N60billion to argument FAAC sharing which triggered an uproar.
Obaseki's claim was debunked by the Minister of Finance, Zainab Ahmed accusing the Governor of lying with the Governor of Central Bank saying it was a political statement taken too far.
Expert has predicted that the zero allocation from the NNPC would amount to governors receiving a meager amount that would hardly meet the responsibility of most state Governors like payment of salaries and others.
Though, a source revealed that there was N200 billion saved from the previous month that would be used to argue the shortfall.
Although the resurgence in the price of crude oil may be faced with mixed feelings according to financial experts, partly, it will boost the revenue generation and foreign exchange for the county, while on the other hand, it would translate to an increase of the petroleum to the final consumer.