Wale Edun, the minister of finance and coordinating minister
of the economy, says the Nigerian National Petroleum Company (NNPC) Limited has
commenced the process of paying the $6 billion debt owed to suppliers.
Edun spoke on Wednesday during an engagement with investors
in Washington DC.
The global investors’ forum was held on the sidelines of the
2024 annual meetings of the International Monetary Fund (IMF) and the World
Bank.
Addressing a question on the supply arrears the NNPC owes to refined petrol suppliers, Edun said the national oil firm would soon start clearing the debt, making clarification on the petrol subsidy removal announced earlier in the year.
“In terms of NNPC and their situation, the reality is that,
although the subsidy on May 29, 2023, was removed and was no longer on the
balance sheet of the government, it did rear its head, not in terms of petrol
subsidy, but foreign exchange subsidy, which was borne elsewhere, and borne
mainly by NNPC,” the minister said.
“I think what I can say about their own situation is with
where they are now, they have a route to paying down their payables and I’m
sure that in no time at all, they will start. From what I understand, they have
even commenced the process of paying down their payables.”
On September 1, the NNPC had admitted to owing the sum of $6
billion to suppliers of petrol, also known as premium motor spirit (PMS).
Speaking on the issue, Olufemi Soneye, the company’s chief
corporate communications officer, said the NNPC is facing a serious financial
strain due to the petrol supply costs — a development that is affecting the
company’s ability to sustain PMS supply.
‘FG DETERMINED TO
MAINTAIN MARKET PRICING OF PETROL’
On pricing, Edun said the Central Bank of Nigeria (CBN)
moved to a willing buyer, willing seller, market-based pricing mechanism for
foreign exchange (FX).
The minister explained that the same system also applies to
petroleum products.
“The same is now true of petrol. Diesel is willing buyer,
willing seller, market-based. Kerosene is a free market pricing. Jet fuel is
free market pricing and now petrol is the same,” Edun said.
“So, we have local refiners that are able to buy crude in
naira. They have their margins, they refine, and they sell in naira and that is
the market that we have now.
“Importantly, we can see that it is the first time, in maybe
40 years, that we have had that. It’s taken tremendous, not just boldness and
courage, but determination and not just determination, but no small level of
skill and consultation and so forth.
“The idea is that
there is determination to maintain market pricing of petrol and what that will
mean is that the wasteful and inefficient and costly 5 percent of GDP that was
flowing out of Nigeria to the benefit of a few people and surrounding countries
will now be available to develop and modernise the Nigerian economy.”
In efforts to fully deregulate the downstream sector, the
federal government had commenced the new direct purchase model on petrol
lifting on October 11.
This means that oil marketers can now buy petroleum products
directly from the Dangote refinery and other local producers without going to
the NNPC.
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