The Nigerian National Petroleum Corporation (NNPC) paid oil marketers ₦5.34bln (about $14mln) for fuel in June, months after it changed its pricing method in an effort to eliminate subsidies.
NNPC outlined the “under-recovery” bill in its June monthly statement, a term used to reference money lost through fuel sales.
Under-recovery is the losses incurred by the oil firm due to the difference between the subsidised price at which the corporation sells petrol and the price which it should have received to meet its production cost.
The firm’s spokesman, Kennie Obateru, says the costs represented temporary payments to oil marketers for stocks they held before oil subsidy was removed.
He said the payments will be spread over six months.
The Nigerian government, through the Petroleum Products Pricing Regulatory Agency officially [PPPRA], had in March introduced a ₦145 cap to the pump price of petrol, a move aimed at eliminating subsidy, allowing prices to be determined by market forces while maintaining government control.
Data contained in the latest June 2020 financial and operations report of NNPC showed that the corporation incurred ₦5.348bn as subsidy on imported petrol in June.
On a month by month basis, the NNPC incurred N43.31bn, N20.68bn and N37.66bn as under-recoveries in January, February and March 2020 respectively. For April and May, it posted zero under-recovery based on receipts and payments for the months.
In June 2020 however, subsidy, it incurred over N5bn as under-recovery, a development that showed it spent that much on petrol subsidy in that month.
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