When Muhammadu Buhari became president in 2015 he told Nigerians that subsidy for which Goodluck Jonathan was vilified when he sought a marginal increase in petrol pump price had been removed and effected a significant price increase, it did not take long before it emerged that subsidy was still being paid.

No, its not subsidy. Its under-recovery, we were told.
In his inaugural speech on May 29, 2023, President Tinubu gleefully announced that subsidy is now a thing of the past. The announcement was followed an astronomical increase in pump price of petrol and the downward spiral in the economy rolled in ever since. As in Buhari’s time, it did not take long before it emerged that subsidy was still being paid. After a prolonged period of loud silence, NNPCL finally opened up but gave us another name for subsidy.
“It is not subsidy, it is importation shortfall”, Chief Financial Officer of NNPC Limited, Alhaji Umar Ajiya, almost swore in insisting that nobody or organisation was paid any subsidy in 2024. So from ‘under recovery’, we now have ‘importation shortfall’ as the newest nomenclature from the oil behemoth. Illogically, it came as the opaque state oil company which recently added ‘Limited’ to its name announced a net profit of N3.297 trillion at the end of the 2023 financial year in December. Great news? Not quite.
Jiya simultaneously announced that Tinubu has approved a request by NNPC Limited to utilise the 2023 final dividends due to the federation to pay for petrol subsidy. Nothing, absolutely nothing, will be remitted into the federation account as a result of meeting the ‘importation shortfall’. Given the report that a forecast by NNPC Limited showed that the cumulative petrol subsidy bill from August 2023 will hit N6.884 trillion by December 2024, the zero remittance to the federation account will continue well beyond December. Even the earlier approved payment of 2024 interim dividends to the federation has been cancelled by Tinubu “to help boost NNPC’s cash flow.”
In the absence of transparency in the management of the oil and gas industry, the apparently cosmetic change in NNPC’s status will not change anything. In trying to justify the cancellation of payment of the so-called dividend to the federation account, Jiya refrained from disclosing the most fundamental figure for determining the subsidy.
“No marketer has received any money from us by way of subsidy. What has been happening is that we have been importing PMS, which has been landing at a *certain cost price* (emphasis mine) and government tells us to sell it at half price”, Jiya stated. “Certain cost price”, quantity shipped in, insurance and the final landing cost are the factors NNPCL will never reveal.
At the point of adding ‘L’ to NNPC, it ceased to be a government parastatal but a limited liability company registered with Corporate Affairs Commission that is supposed to operate fully without government subvention, and expected to generate profit, and plough it into the federation account. If NNPC had ceased to be a parastatal but a company that accounts to its owners, the unilateral approval given by President Tinubu to pay N3.297 trillion as subsidy without consulting the other co-owners, the 36 states, and without proper certification of how the figure was arrived at is controversial and a presidential overreach.
“The oil and gas situation in Nigeria has been shambolic. There is a complex interplay of interests in the sector. This government has been paying subsidy. The refineries that are not working have made the situation convoluted. The landing cost of petrol today is over N1,000 per litre while the pump price is less than N1,000 because of subsidy. This is a loss position already to NNPCL”, Mr. Emmanuel Odiaka, a downstream operator, says.
“The government is not helping matters with the comatose refineries that have become a cesspit of corruption, spending billions on turn-around maintenance every year without achieving any result. The refineries have to be operational, Dangote Refinery has to fully come on stream, and there should be considerations for modular refineries with the right market dynamics before we can heave a sigh of relief. Otherwise, NNPCL will continue to be in dire straight, and the fuel supply crisis will continue to bite harder”, Odiaka added, insisting that the nightmare is just beginning.
What has been unravelled is that the much vaunted claim that Tinubu has removed petrol subsidy is a charade, the product of utter planlessness from the point the proclamation was made on inauguration day. It has become a rudderless and horrendously expensive adventure that has plunged the national economy into a cliffhanger.
As Chiedozie Ugbechie, an engineer, pointed out, “if such decisions were taken under President Jonathan, they would have put pressure for his impeachment. Recall how the governors loyal to Tinubu and the then ACN took Jonathan’s government to court for daring saving some money under the excess crude account. Tinubu does not have power to take such a decision he just did. It’s quite an overreach and an impeachable offence. But the National Assembly has lost its independence and does not realise that it is co-equal arm of government with the quality of its leadership it has”.
In the absence of true transparency in the management of the oil industry, it is doubtful there will be any silver lining even when the announced decision to sell crude oil to Dangote Refineries as well as the modular refineries in Naira begins in October. If NNPCL continues importing refined products and declare whatever it likes to federal government with express acquiescence of Aso Rock, it can only get worse. With perennial failed promises to rehabilitate its four refineries, NNPCL has effectively become a trading company specialising only in the importation of petrol on its own terms as a sole importer. And its regaling in it.