The Nigerian National Petroleum Company Limited (NNPCL) has demanded a refund of N2.6 trillion from the Nigerian government to cover foreign exchange differential claims for fuel importation between August 2023 and June 2024. This claim was disclosed by Minister of Finance and Coordinating Minister of the Economy, Wale Edun, in the recently released minutes of the June meeting of the Federation Accounts Allocation Committee (FAAC).
The claim has increased to N4.71 trillion as of June 2024, driven by a recent surge in foreign exchange rates, which stood at N1,593.62 per dollar. NNPCL’s claim pertains to the cost of importing Premium Motor Spirit (PMS) under a “Weighted Average Rate” approved by the presidency from October 2023 to March 2024.
Joshua Danjuma, General Manager of the FAAC office at NNPCL, explained that the amount claimed is intended to cover the landing cost of PMS. He confirmed that the figure had significantly increased as of May 2024 due to changes in the exchange rate used for sourcing foreign exchange to cover these costs.
Minutes from the FAAC meeting reveal that NNPCL had an outstanding claim of N2,689,898,039,105.53 as of May 2024 due to the use of the Weighted Average Rate. This claim has been subject to presidential approval from October 2023 to March 2024.
In June 2023, the National Economic Council allowed NNPC to import fuel at an exchange rate of N650 to $1. However, the devaluation of the naira pushed the rate to N1,200, leading to a differential of N550. The claim rose significantly month-by-month, with an outstanding balance of N1.18 trillion in August 2023 increasing to N4.71 trillion by June 2024.
This development contradicts claims by Minister of Petroleum Resources, Heineken Lokpobiri, that the fuel subsidy has been removed. President Bola Ahmed Tinubu announced the removal of the fuel subsidy in June 2023, and the Minister of Finance stated that fuel subsidy payments are not included in the 2024 budget. However, the International Monetary Fund (IMF) and World Bank have suggested that the Nigerian government may have reintroduced fuel subsidies.
Former President Olusegun Obasanjo also indicated in a recent interview that fuel subsidies have returned in Nigeria due to inflation. In July 2024, the Major Energies Marketers Association of Nigeria reported that the monthly subsidy on PMS had risen to approximately N707 billion, while the Independent Petroleum Marketers Association of Nigeria (IPMAN) predicted that Nigeria’s fuel subsidy expenditure might exceed N700 billion monthly. Fuel queues continue to persist in major cities, with prices ranging between N617 to N800 per liter.
