The Nigerian National Petroleum Company Limited (NNPCL) is requesting a refund of N4.71 trillion from the Federal Government to cover outstanding debts incurred from importing Premium Motor Spirit (PMS), commonly known as petrol, between August 2023 and June 2024.
This claim, categorized as “Exchange rate differential on PMS and other joint venture taxes,” was revealed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, during the June Federation Accounts Allocation Committee (FAAC) meeting, with the minutes obtained by our correspondent on Thursday.
Exchange rate differentials arise from the variance in value between two currencies over time, impacting the cost of transactions like fuel imports. The NNPCL’s demand suggests the government would need to cover the difference between projected and actual expenses for importing petroleum products, contradicting earlier claims of subsidy removal.
The debt, which has grown significantly due to the devaluation of the naira, was initially based on an exchange rate of N650 to $1 but surged to N1,200 by June 2024. This escalation has raised questions about the true status of fuel subsidies, especially after President Bola Tinubu declared the end of subsidies on May 29, 2023.
At the FAAC meeting, state finance commissioners expressed concerns over the NNPCL’s claims. The Finance Commissioner of Akwa Ibom State, Linus Nkan, sought clarification on how the N2.6tn exchange rate differential arose, while the General Manager of the FAAC office at NNPCL, Joshua Danjuma, confirmed that the figure had increased due to changes in the exchange rate affecting the landing cost of PMS.
Documents obtained by The PUNCH revealed that the outstanding balance of N1.18tn in August 2023 had steadily climbed to N4.71tn by June 2024. The NNPCL’s demand for the refund is seen by some experts, like Professor Wumi Iledare, as complex and difficult to justify, given the company’s role in selling oil on behalf of the government.
Iledare questioned the rationale behind the NNPCL’s request, emphasizing that the company should be paying royalties and taxes to the government, not seeking refunds. He suggested that this might be an under-recovery claim related to fuel importation, but the situation remains complicated and unclear.
Meanwhile, concerns were also raised about the overall revenue generation by government agencies, with some states noting that only 50% of the budgeted revenue for the current year had been achieved. This has led to calls for more realistic budget projections and increased efforts in revenue generation.
Your blog is like a beacon of light in the vast expanse of the internet. Your thoughtful analysis and insightful commentary never fail to leave a lasting impression. Thank you for all that you do.
I have been surfing online more than 3 hours today yet I never found any interesting article like yours It is pretty worth enough for me In my opinion if all web owners and bloggers made good content as you did the web will be much more useful than ever before