This financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply, it added.
The Nigerian National Petroleum Company Limited (NNPCL) has been embroiled in a storm of challenges, as the convergence of petroleum scarcity and an immense $6 billion debt to international oil traders threatens to undermine its very foundations.
The company has taken the unusual step of publicly acknowledging the extent of its financial obligations, which have effectively hobbled its capacity to guarantee a stable supply of petroleum products.
This acknowledgment has shed light on the gravity of the situation, highlighting the imperative for swift and decisive action.
In a statement signed by the company’s Chief Corporate Communications Officer, Olufemi Soneye, on Sunday, the company 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, it added.
It said, “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.”
While announcing the removal of subsidy, the President claimed that subsidy removal would reduce the financial burden on the country and ensure the availability of petroleum, both of which he has failed to achieve so far.
Checks by SaharaReporters however puts context to the plight of the Nigerian oil sector.
The total of $6 billion owed by the NNPCL is more than the combined gross profit posted by the oil company between 2022 and 2023.
Gross profit is arrived at before deducting operating and distribution costs. This means that more costs will be deducted from the gross profit before arriving at the actual profit.
Checks show that in 2023, the NNPCL posted N7 trillion profit and posted another N2.1 trillion in 2022.
The addition of these amounts to N9.1 trillion.
However, with the exchange rate as of the time of this report standing at N1,598 to one dollar, it would mean that the total money owed by NNPCL is N9.5 trillion ($6 billion multiplied by N1,598).
This would mean that the oil company owes more than its gross profit in two years.
Also, the amount owed is more than what Nigeria spent on subsidy in 10 years between 2012 and 2021 based on data by the Nigeria Extractive Industry Transparency Initiative. Between this period, the country spent N8.9 trillion on fuel subsidies.
This development raises more concerns for the effectiveness of the subsidy removal policy of the Tinubu-led administration which was meant to ease the supply of petroleum to the Nigerian space and reduce pressure on debts burden incurred by the government.