The burden of petroleum subsidy which has been a significant issue in the petroleum industry over time, has now been shifted from Nigerian National Petroleum Company (NNPC) Limited to the Federal Government.
The Chief Executive officer Mele Kyari of NNPC Limited said it is now the duty of the government to adopt any strategy it deems necessary to pay subsidy to importers of refined Petroleum Motor Spirit (PMS).
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He said the federal government can use methods like price fixing and taxation to generate funds for the subsidy payment. Kayari also asked the government to learn from other countries to run through the process effectively.
“Subsidy is not NNPC’s burden, it is a decision for the state,” he replied when asked by State House, Abuja reporters on whether or not NNPC Limited would, as an independent company, continue to bear the petrol subsidy burden.
”Every jurisdiction or countries, see it differently. Some countries put taxation on petroleum on top of the market prices, while in other jurisdiction, they will reduce the level of taxation, that is a level of subsidy.
In some other countries there is zero taxation and customers pay the market price, which is also a subsidy.
In other countries, they may say we don’t want the people to buy at the market price and reduce the price.
So, it is no longer an NNPC issue and NNPC has no issue with this. NNPC will be happy to supply because we will now see the state as our customers.”
Kyari also explained that the leadership of the new NNPC Limited will no longer go to the monthly Federation Accounts Allocation Committee (FAAC) meeting for revenue remittance. He said all liabilities arising from unremitted arrears to the FAAC have gone with the old corporation.
“We are now a private company. Will MTN go to FAAC? We will pay our taxes; we will pay our royalties and we will deliver dividends to our shareholders.
We do not have a bloated workforce. Today, our total population is just 7,000 and I believe that with the expansion that we have lined up, we are going to need more people to work for us,” he stressed.
He further added that the company would be needing more hands with the expansion that they have lined up.
In the next six months, NNPC will embark a strategic initiative to achieve its mandate in ensuring energy security for the country by rolling out a comprehensive expansion plan to grow our oil retail from 547 to over 1,500.”
Kyari said: “We are convinced that in the mid of next year, this company will be IPO ready, which means there are systems, processes on the side of profitability, and not only a company that is accountable to its shareholders. This is what IPO processes look for to see in a company that has the assets.
Today, the government has transferred those assets to NNPC so we have very ample assets that nobody has in this country and of course Africa.
No company has the level of assets that we have and with assets, the best of people and the best of processes, definitely getting into IPO is very close by.”
NNPC Limited would now operate as a commercial oil company and deliver value to over 200 million shareholders (Nigerians) with integrity and excellence.
Source: June 20, 2022 https://thenationonlineng.net/nnpc-shifts-subsidy-payment-burden-to-govt/