by Olayiwola Oshunrinade

Prior to this period, the Nigerian National Petroleum Company Limited (NNPCL), which used to be known as the Nigerian National Petroleum Corporation (NNPC), was the main source of revenue of the Nigerian government.

Then, the money from oil, after the oil windfall of the 1970s, was being spent to develop the nation including building roads, providing infrastructure, healthcare, and other development purposes.

That was when the organisation was making huge profits and serving the financial needs of the government.

However, the reverse seems to now be the case as it was gathered that NNPCL is no longer profitable and the money from the organisation is now being used for recurrent expenditure rather than capital expenditure.

Despite announcing a net profit of N3.297 trillion at the end of the 2023 financial year, the NNPCL is still not a profitable organisation as revealed by competent sources to the Nigerianpanorama.
This, we were told, is due to the redirection of its profits towards fuel subsidy payments.

Insiders close to the corporation confirmed that NNPCL’s profits are now used to stabilise fuel prices, preventing a potential crisis caused by soaring fuel costs.

This has resulted in NNPCL being unable to remit funds to the Federation Account, as revealed recently by Anambra State Governor, Professor Charles Chukwuma Soludo.

Soludo disclosed that NNPCL has not made any remittances since February 2024, leading to reduced allocations shared through the Federation Accounts Allocation Committee (FAAC).

Investigations indicated that the primary reason for this is that NNPCL’s profits are being diverted to subsidise fuel prices behind the scenes. One source, speaking anonymously, explained that if NNPCL hadn’t channeled its profits into this purpose, fuel prices would have reached unaffordable levels for Nigerians.

“The government had no choice but to use NNPCL’s profits for subsidy payments,” the source said.

“Although they claim subsidies have been removed, the reality is that they’re still being paid indirectly. If the profit had not been used, we would have faced an economic crisis,” he said.

Another official within NNPCL confirmed that while the government publicly denies the reintroduction of subsidies, the company’s profits are being used to fund interventions to keep fuel prices within reasonable limits. The landing cost of petrol has reportedly risen above N1,000 per litre, but subsidies have kept prices between N600-N700 per litre.

Governor Soludo, in a recent discussion, stressed that NNPCL has not contributed to the Federation Account in months. He noted that FAAC distributions now rely solely on revenues from Customs and company taxes, as oil proceeds have dwindled.

A recent NNPCL report forecasted that fuel subsidies from August 2023 to December 2024 would reach N6.884 trillion. The report also indicated that due to subsidy payments, NNPCL is unable to remit N3.987 trillion in taxes and royalties. The company communicated this shortfall to President Bola Tinubu, citing “subsidy shortfall/foreign exchange differential” as the reason.

According to the report, President Tinubu has approved the use of NNPCL’s 2023 final dividends to cover fuel subsidy payments. He also sanctioned the suspension of the corporation’s 2024 interim dividends to support its cash flow, as subsidy costs are projected to exceed N5 trillion in 2024.

NNPCL’s Chief Financial Officer, Mr. Umar Ajiya, clarified in the company’s 2023 unaudited financial report that the corporation is absorbing the shortfall in petrol importation costs to maintain energy security. Ajiya further explained that NNPCL employs a “derived FX rate” to keep pump prices stable, with the difference between this rate and the official exchange rate representing the subsidy.

It was gathered that this is unsettling the government and that efforts are being made to repair the nation’s refineries to change the narratives of the oil industry.

Recall that there have been news reports that the Port Harcourt refinery in Rivers State would soon be back on stream, same goes for other refineries in Kaduna and Warri, Delta State.

This is coming after the first private refinery in the nation; Dangote Refinery, situated in Ibeju-Lekki area of Lagos State, started production of fuel products.

A source in the presidency revealed that the Federal Government is not happy with the development and that it is making frantic efforts to improve the fortune of the nation and reduce the hardship in the land.

“The administration of President Bola Tinubu is not happy with what is happening at the moment. The government wants to go out of its way to make things better and alleviate the suffering of the masses

“What they want to do is to make sure that the NNPCL is profitable once again and the money from oil used to develop the nation under capital expenditure unlike what is currently happening. Nobody is happy and all hands are on deck to change the current narrative,” said a source in the presidency.