Nigeria incurs N1.4tr under-recovery on petrol yearly – Kachikwu
Nigeria currently incurs over N1.4 trillion yearly as under-recovery or losses on the importation and sale of petrol, minister of Petroleum Resources, Dr. Ibe Kachikwu, said yesterday.
The minister made the revelation at a workshop on the Harmonization of Liquefied Petroleum Gas (LPG) Regulatory Requirements in Abuja.
According to Kachikwu, the government through the Nigeria National Petroleum Corporation (NNPC), continues to shoulder such huge burden because of the over reliance of the country on premium motor spirit otherwise called petrol.
He said, “The need for clean energy is very essential. We need to move away from the complete (reliance) of our transport sector on PMS. It is creating a lot of under-recovery of over N1.4 trillion around exposures to the government,” the minister said.
He added that, “the earlier we can begin to move into other components of cleaner fuels and rely less on PMS, the safer it will be. The issues of fuel queues will disappear.”
Daily Trust reports that there has been controversy over whether to classify the under-recovery on PMS as outright subsidy or just business losses.
The amount announced by the minister is more than the average N1 trillion appropriated and spent yearly as subsidy payments from 2006 to 2016 when the subsidy scheme was administered.
NNPC has severally explained that there was N774 million underrecoveries in the importation and sale of PMS but the burden was categorized as business losses which the Act establishing NNPC recognizes.
The losses, from the PMS imports, according to the corporation, could not be classified as subsidy since it was not appropriated for by the National Assembly.
Minister of Finance, Mrs. Kemi Adeosun, while answering questions from journalists in Abuja recently explained that there was no subsidy but under-recovery because the NNPC was currently doing all the importation.
“They are importing at a higher price than they are selling, which means they are losing money, which means effectively that that loss is being borne by everybody and effectively it reflects in the Federation Account,” she said.