NNPCL Faces Financial Crisis Over Petrol Subsidies, Onanuga Proposes Local Refineries as Solution
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In a recent statement, Bayo Onanuga, the Special Adviser on Information and Strategy to President Bola Tinubu, revealed that the Nigerian National Petroleum Company Limited (NNPCL) has admitted to facing severe financial difficulties due to its inability to continue subsidizing petrol prices. Onanuga posted this update on X on Tuesday.
He explained that if NNPCL were to persist in covering the gap between the landing cost of petrol and its retail price, it would lead the company toward bankruptcy. Onanuga attributed the NNPC’s current debt situation to the company’s past efforts to manage escalating petrol costs and shield Nigerian consumers, rather than any form of government deceit.
Bayo Onanuga, recently highlighted that the Nigerian National Petroleum Company Limited (NNPCL) is struggling to maintain the price differential between petrol’s landing cost and retail price. He warns that continuing this practice could drive NNPCL towards insolvency.
He pointed out that this financial strain is affecting the broader government system, as the NNPCL’s inability to pay its contributions to the Federation Account is impacting the operational capacity of all three tiers of government.
According to him, there are no straightforward solutions to this issue. Urgent action is needed to ensure that NNPCL remains viable, so the government can function effectively and petrol can continue to be available at the pumps.
Bayo outlined a potential solution to Nigeria’s current petroleum challenges. He suggested that the Dangote Refinery, along with other local refineries such as the government-owned Port Harcourt Refinery, could significantly alleviate the situation.
He says that the commencement of operations at these refineries could transform the local market. As these facilities start functioning fully, they are expected to supply fuel domestically, which would benefit the country and its economy in multiple ways. This development is anticipated to create numerous well-paying jobs along the entire value chain.
Additionally, Onanuga noted that the increased local refining capacity could reduce the country’s reliance on foreign exchange for importing petroleum products, addressing one of the major financial pressures faced by the Nigerian economy.
Recently, the Nigerian National Petroleum Company Limited (NNPCL) raised the price of petrol to N855 per litre. However, the landing cost of Premium Motor Spirit (PMS) stands at approximately N1,200 per litre.
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