AGS NEWS – The Nigerian National Petroleum Company Limited (NNPC) has requested a refund of N4.71 trillion from the Federal Government to cover debts incurred for importing Premium Motor Spirit (PMS), commonly known as petrol.

This claim, covering the period from August 2023 to June 2024, was labeled as “Exchange rate differential on PMS and other joint venture taxes.”

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this during the June meeting of the Federation Accounts Allocation Committee (FAAC), as revealed in meeting minutes obtained by our correspondent on Thursday.

Exchange rate differentials arise from the difference in value between currencies over time, affecting the costs associated with importing goods, such as petroleum products.

The government is expected to cover these differences, which has led to renewed concerns about the reintroduction of fuel subsidies, despite claims that subsidies were eliminated.

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Minister Edun explained that the NNPC received presidential approval to use the “Weighted Average Rate” for foreign exchange from October 2023 to March 2024.

The NNPC has since sought an extension of this approval, which is currently under consideration by the National Economic Council.

The debt owed to the NNPC has escalated, reaching N4.71 trillion by June 2024, driven by the devaluation of the naira.

The exchange rate differential has resulted in significant increases in the cost of importing PMS, raising questions about the government’s commitment to subsidy removal.

Finance commissioners from various states, including Akwa Ibom and Niger, expressed concerns about the growing debt and the impact on the federation’s finances.

They called for more clarity on the NNPC’s claims and better revenue generation from government agencies.

An energy expert, Professor Wumi Iledare, criticized the NNPC’s request for a refund, arguing that the company should be paying royalties and taxes to the government rather than seeking compensation.

He highlighted the complexities of the situation and the need for the NNPC to adhere to its new status under the Petroleum Industry Act.