Minister of Finance, Kemi Adeosun, while responding to questions from State House Correspondents after a Federal Executive Council (FEC) meeting, explained that the Nigerian National Petroleum Corporation (NNPC) is not engaged in subsidy but “under recovery” for importation of petrol at a cost higher than N145 per litre, The Sun reports.
On who pays the differentials between the N171 landing cost for petrol and N145 pump price, she said “on the question of subsidy, the price of oil for Nigeria today is a double edged sword. So for every dollar that goes up, we get more revenue but also because we are importing refined petroleum, the landing cost of fuel is increased.”
“Now, when there is talk of payment of subsidy, technically today, there is no subsidy but there is under recovery. Why that is so is because NNPC is currently doing all the importing. It is importing at a higher price than it is selling, which means it is losing money. This means effectively that the loss is being borne by everybody and it is reflected in the Federation Account.”
“So there is no subsidy payment in the way the old subsidy scheme used to work where they were paying the oil marketers but there is an under recovery, a loss on the importation of PMS being borne by NNPC and therefore indirectly being borne by everyone one of us.”