NNPC Continues FAAC Deductions, to Withhold N174.4bn in August

•Only N47.1bn of projected N122bn remitted in July

•Subsidy payment hits N608.808bn this month

Emmanuel Addeh

in Abuja

The Nigerian National Petroleum Corporation (NNPC) is continuing its regime of deduction from the federation account as it set to withhold N117.4 billion from the three tiers of government, THISDAY gathered yesterday.

With the development, by the time the national oil company withdraws the full amount this month during its monthly Federation Account Allocation Committee (FAAC) meeting, the total subsidy retention on petrol since this year would have hit a total of N608.808 billion since the full return of what the government termed under-recovery in February this year.

Information from the NNPC’s July presentation on its activities to the FAAC, obtained by THISDAY, indicated that the corporation was only able to contribute N47.1 billion during the month.

But its projected remittances to the joint account remained at about N122 billion, leaving a deficit of about N75 billion.

As expected, according to the new data detailing how the national oil company arrived at its net payment for the month, N114.3 billion was deducted in June, while an additional N50 billion, which the corporation said was in arrears, was also subtracted.

The document further showed that the overall NNPC crude oil lifting of 11.58Mbbls (export and domestic crude) in May 2021 recorded 29.27 per cent increase relative to the 9.42Mbbls lifted in April 2021.

In addition, the FAAC document indicated that Nigeria maintained 1.53 million bpd of the Organisation of Petroleum Exporting Countries (OPEC) Production cut in May 2021, excluding condensates.

Crude oil export revenue received in June 2021 amounted to $11.68 million, equivalent to N4.5 billion, while domestic gas receipts in the month was N37.4 billion.

Feedstock valued at $48.02 million was sold to the Nigeria Liquefied Natural Gas Limited (NLNG) during the period, out of which $36 million was received during the month, with the difference being Modified Carry Agreement (MCA) obligations, gas reconciliation and credit notes.

The sum of $136.15 million, being miscellaneous receipts, gas and ullage fees and interest income was received in June 2021, the document disclosed. .

“The sum of N114,337,097,352.49, being the value shortfall arising from the difference between the landing cost and ex-coastal price of petrol recorded in May 2021, plus the N50 billion arrears of March 2021, was applied on the gross domestic receipts before arriving at the net receipt of N47.16 billion.

“The June, 2021 value shortfall of N170,435,950,434.47 is to be deducted from the July, 2021 proceeds due for sharing at the August, 2021 FAAC meeting,” the NNPC FAAC document noted.

Year-to-date, it showed that while N90.86 billion was remitted to FAAC in January, N64.161 was contributed in February, while it was N41.184 billion in March. NNPC remitted zero naira in April, but was only able to make a payment of 38.608 and N47.162 in May and June respectively.

In June, the NNPC told the nation that Nigeria now loses about 42 million litres of petrol to the activities of smugglers across the country’s borders, increasing Nigeria’s estimated daily consumption of 60 million litres to 103 million litres, thereby worsening the subsidy payment regime.

The national oil company stated that the under-recovery or subsidy that the government pays on the product every month had begun to hover between N140 billion to N150 billion, making the corporation unable to contribute to the national coffers, the federation account, as the subsidy it pays has kept wiping out the gains made from rising international oil prices.

Group Managing Director of the NNPC, had also explained that with the exchange rate, the pump price of petrol should be N256 per litre in June, maintaining that if the NNPC was to sell at the going rate, and incorporating the current exchange rate, fuel will be selling for about N256 a litre.

However, the government appeared to have been unable to remove the subsidy citing negotiations with labour as an excuse, although it is also believed that it has been weighing its implications on already skyrocketing commodity prices in the country.