The Nigerian National Petroleum Company Limited (NNPCL) has disclosed that the Federal Government incurred a significant debt of N5.1 trillion due to under-recovery and energy security expenses related to fuel imports in 2023.
In its financial report for the fiscal year ending December 31, 2023, NNPCL detailed that N6.25 trillion was accrued from domestic crude oil supply, while N3.14 trillion was categorized under other receivables.
Receivables, which represent debts owed to a company for goods or services delivered but not yet paid for, saw a dramatic increase of N7.2 trillion, or 76.7%, compared to the N2.18 trillion incurred in 2022.
The report clarified that the N5.1 trillion in under-recovery and energy security expenses was primarily linked to the costs associated with domestic crude oil supply and other receivables, following a government directive that prevented the sale of Premium Motor Spirit (petrol) above a regulated price.
This total comprises N3.3 trillion in under-recovery from January to May 2023 and N1.8 trillion in energy security expenses from August to December 2023.
Bala Zakka, a petroleum engineer and oil and gas analyst, criticized the use of the term "under-recovery," suggesting it obscures the true financial situation.
He emphasized the need for transparency and clarity in communication, particularly when addressing the public, rather than resorting to technical jargon that may confuse citizens.
Waiziri Adio, former Executive Secretary of the Nigeria Extractive Industries Transparency Initiative, echoed this sentiment, urging NNPCL to adopt a more straightforward approach in its disclosures.
He expressed concern over the company's terminology regarding subsidy payments, arguing that the distinction made by NNPCL between a "shortfall" and a subsidy is misleading.
Adio pointed out that historically, the responsibility for subsidy payments lay with the now-defunct Petroleum Products Pricing Regulatory Agency (PPPRA) and the Ministry of Finance, not NNPCL.
