The Nigerian National Petroleum Company Limited (NNPCL) has revealed that the Federal Government’s outstanding debt on exchange rate differentials for Premium Motor Spirit (PMS) imports skyrocketed to N7.74 trillion as of September 2024.
This revelation came during a presentation to the Federation Account Allocation Committee (FAAC) in Abuja, exposing how the government’s intervention in fuel pricing led to a massive financial burden despite President Bola Tinubu’s declaration in May 2023 that the petrol subsidy was abolished.
Hidden Fuel Subsidy Costs Pile Up
Despite the official removal of subsidies, newly surfaced documents indicate that the government has been covering the gap between the estimated and actual importation costs of petrol. Instead of passing these costs to consumers through higher pump prices, the NNPCL has been absorbing the difference, an amount it now seeks to recover from the federal government.
Reports from Punch indicate that the subsidy-related debt has surged due to the naira’s depreciation. The FAAC presentation disclosed that the government is working on a 210-day repayment plan to settle the N7.74 trillion owed to NNPCL.
Soaring Debt: A Breakdown
The FAAC report provides a detailed timeline of how the subsidy debt escalated from N1.29 trillion in June 2023 to the staggering N7.74 trillion by September 2024, accounting for 14.07% of the proposed N54.99 trillion 2025 national budget.
Month-by-Month Increase:
June 2023 – N1.29 trillion
October 2023 – N1.81 trillion
December 2023 – N2.94 trillion
March 2024 – N4.68 trillion
June 2024 – N6.97 trillion
This steady rise highlights the lingering impact of currency fluctuations and government fuel price interventions.
Petrol Consumption Declines as Import Reliance Continues
Meanwhile, Nigeria’s petrol consumption has reportedly dropped to 50 million litres per day, according to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). Despite improved refining capacity, the country’s three operational refineries still supply less than 50% of local demand, making imports essential.
NMDPRA’s Chief Executive, Farouk Ahmed, noted that without continued imports, fuel shortages would persist nationwide.
What’s Next?
As the government grapples with settling this enormous debt, industry analysts warn that the burden may eventually fall on taxpayers or lead to further economic strain. Whether the promised 210-day repayment plan will materialize remains to be seen.
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