The Nigerian National Petroleum Company Limited may deduct over N1tn in the next six months from the Federation Accounts Allocation Committee, following the decision of the Federal Government to continue subsidising Premium Motor Spirit, popularly called petrol.

Figures obtained from the oil firm on its subsidy deductions in 2021 indicated that the amount deducted monthly from FAAC by the NNPC was higher during the periods of higher crude oil prices, as FG plans PIA amendment, extends subsidy removal by 18 months

This was also confirmed by economists, who explained that the higher the international price of crude oil, the higher the amount to be deducted by the NNPC from FAAC.

They also stated that the volume of petrol consumed in a particular month was contributory to the amount being spent as subsidy, but insisted that the major factor was the global crude oil price.

As the sole importer of PMS and supplier of last resort, the NNPC ensures the adequate supply of refined petroleum products by importing the commodities.

PMS is not deregulated by the Federal Government, as the price is sold at between N162 and N165/litre at filling stations, far lower than the actual cost of the commodity.

The Chief Executive Officer, NESG, Laoye Jaiyeola, commended the government for passing the Petroleum Industry Act but stressed the need for collaboration with critical stakeholders in the oil and gas sector to ensure implementation.

He noted that the proposed fuel subsidy removal as stipulated in the PIA would have significant impacts on the economic outlook for 2022.

Jaiyeola said the continued implementation of the fuel subsidy was not sustainable as it was introduced as a short-term palliative.

“When the fuel subsidy was introduced it was supposed to be a short-term palliative but it has gone beyond intended purposes.