The Federal Government’s indebtedness to the Nigerian National Petroleum Company Limited as exchange rate differential (subsidy) for the importation of Premium Motor Spirit (petrol) rose to N7.74tn as of September 2024 when the deregulation of the downstream oil sector was fully implemented.
This amount covers the cost of maintaining a specific price range in the retail market, despite acquiring the product at a higher rate between June 2023 and September 2024.
This was disclosed in a presentation by the national oil company to the Federation Account Allocation Committee at its February meeting in Abuja. Our correspondent obtained a copy of the document on Monday.
The FAAC document also revealed that the government is working out measures to settle the N7.74tn fuel subsidy debt within a period of 210 days.
The government supported fuel imports by covering the difference between the projected rate and the actual expenses incurred by the NNPCL for importing petroleum products into the country.
This difference in cost, which ordinarily should be reflected in the retail price of the product and borne by final consumers, is the amount the national oil firm now seeks to recover from the government.
An analysis of the document explained that the exchange rate differential for the period of July to September 2024 was estimated based on the Nigerian Autonomous Foreign Exchange Market rate.
“Thus, the actual differentials may change in line with the prevailing forex (foreign exchange) rate at the time of import settlements.”
The balance brought forward is the additional claim due to the actualisation of an estimated portion of 2017 to May 2023 PMS under-recovery.
A breakdown showed that the total sum of the exchange rate differential due was N10.499tn, but N2.756tn was the exchange rate differential recovered between November 2023 and September 2024. This reduced the cumulative outstanding amount to N7.74tn.
The document further remarked that the weighted average of purchased USD as of February 7, 2025, was applied. It added that payment is ongoing within 210 days.
A month-by-month breakdown indicated that the debt with an outstanding balance of N1.29tn increased to N1.402tn in June 2023, N1.48tn in July 2023, N1.535tn in August, N1.59tn in September, and N1.81tn in October 2023.
By November, these claims increased by N662.9bn to N2.378tn, and by another N616.38bn to N2.94tn in December 2023.
The document further indicated that the figure increased to N3.57tn in January 2024, N3.96tn in February, N4.68tn in March, N5.81tn in April, N6.47tn in May, and N6.97tn as of June 2024.
In July 2024, it increased to N7.46tn, N7.66tn in August, and N7.74tn in September 2024. The amount represents 14.07 per cent of the N54.99tn 2025 national budget.
On May 29, 2023, during his inauguration, President Bola Tinubu publicly declared that “subsidy is gone,” signalling the end of barriers that had been restricting the nation’s economic growth.
The International Monetary Fund, the World Bank, and other authoritative figures had argued that the government quietly reintroduced fuel subsidies.
