AFTER lying to Nigerians that it is not indebted to petrol suppliers, the Nigerian National Petroleum Company (NNPC) Limited has admitted owing its suppliers $6.8 billion, underscoring that the oil company is planning a price increase.

In a statement released by the NNPC’s Chief Corporate Communications Officer, Mr Olufemi Soneye on Sunday, the oil company admitted facing a financial strain due to the supply costs of its premium motor spirit (PMS), also known as petrol. Mr Soneye said the costs were already impacting supply sustainability.

“NNPC Ltd. has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers. This financial strain has placed considerable pressure on the Company and poses a threat to the sustainability of fuel supply.

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“In line with the Petroleum Industry Act (PIA), NNPC Ltd. remains dedicated to its role as the supplier of last resort, ensuring national energy security. We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide,” NNPC said.

Lies have expiry dates

On August 18, 2024, the NNPC had denied owing $6.8 billion to its suppliers, noting that media reports to that effect were all lies.

The NNPC’s statement, released by the same Mr Olufemi Soneye, had read: “The attention of the Nigerian National Petroleum Company Limited (NNPC Ltd.) has been drawn to a media report that the company is indebted to international oil traders to the tune of $6.8bn and that it has not remitted revenues to the Federation Account since January, among other allegations.

“Consequently, the following clarifications have become necessary: 1. That NNPC Ltd. does not owe the sum of $6.8bn to any international trader(s). In the oil trading business, transactions are carried out on credit, and so it is normal to owe at one point or the other. But NNPC Ltd., through its subsidiary, NNPC Trading, has many open trade credit lines from several traders. The company is paying its obligations of related invoices on a first-in-first-out (FIFO) basis.

“It is not correct to say that NNPC Ltd. has not remitted any money to the Federation Account since January. NNPC Ltd. and all its subsidiaries remit their taxes to the Federal Inland Revenue Service (FIRS) regularly. This is in addition to payments of CIT to road contractors under the Road Investment Tax Credit Scheme. In all, NNPC Ltd. is the largest contributor to the tax revenue shared every month at the Federation Account Allocation Committee (FAAC).”

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The NNPC said it had no role whatsoever in the issue of quality/quantity fiscalisation of imported petroleum products, as it was not a regulator in that segment. It noted that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) – the relevant regulatory agency in charge of such issues – was an independent body and would not report to the NNPC Ltd.

The NNPC said it was not averse to inquiries by the media into issues on and around its operations before dissemination to the public either through the print or electronic channels of communication as the company would gladly take the opportunities to state the facts of the subject matter(s).

“This is in line with the company’s commitment to the Transparency, Accountability, and Performance Excellence (TAPE) philosophy as emplaced by the Mele Kyari-led management since stepping into the saddle in 2019.”

Like petrol, like refineries

The NNPC has lied to Nigerians on petrol, just as they have done for its four refineries. After years of turnaround maintenance and lies told by past NNPC bosses, Group Managing Director of the national oil company, Mr Mele Kolo Kyari, on July 8, 2019, said he would fix all the country’s four refineries before 2023 when former President Muhammadu Buhari would leave office.

“We will make sure that within the life of this administration, before Baba’s tenure (President Muhammadu Buhari) ends in 2023, we will deliver on the four refineries. And we will do more than that. We will encourage private refineries particularly the Dangote refinery which can be the game changer for all of us,” Kyari, then newly appointed, had said. But this did not materialise and Kyari did not offer apologies to Nigerians.

Also, at the Senate in July 2024, Mr Kyari had boasted, “I can confirm to you, Mr Chairman, that by the end of the year, this country will be a net exporter of petroleum products.”

He had added, “Specific to NNPC refineries, we have spoken to a number of your committees, and it is impossible to have the Kaduna refinery come into operation before December, it will get to December, both Warri and Kaduna, but that of Port Harcourt will commence production early August this year.”

The August deadline did not come to fruition. The Kyari-led NNPC has also missed its promised September 1 deadline for the Port Harcourt refinery’s restart.

PMS price increase imminent

The NNPC’s financial strain admission, after claims that the petrol scarcity was fuelled by “supply constraints,” is a recipe for a price hike. Currently, only NNPC petrol stations sell PMS at between N615 and N650 per litre. Other stations sell as high as N800-N1000 for a litre of PMS.

The entire episode shows that the NNPC may no longer subsidise petrol and may need to raise its price to stay afloat.

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“The subsidy they provide is not sustainable,” said an energy trader, Mr Ikenga Eluomuno.

“Landing cost of petrol is about N1120-N1150 per litre, but the NNPC is selling at N615 per litre and then paying over N500 for every litre used by a Nigerian. It is not sustainable. However, my worry is that they have lied to Nigerians. Rather than tell Nigerians of an imminent price increase, they have chosen to obfuscate facts.”