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The Nigerian National Petroleum Corporation (NNPC) has again denied allegations that it operates a $3.5 billion subsidy account.

The denial was made by the Group Managing Director of the NNPC, Maikanti Baru, while appearing before the Senate Ad- Hoc Committee Investigating alleged application of $3.5billion petroleum subsidy by NNPC.

Baru denied this yet again during an investigative hearing by a Senate ad-hoc committee investigating the application of the $3.5billion alleged petroleum subsidy by the national oil company as well as for subsidy recovery application.

The investigation into this development followed a motion by Senator Biodun Olujimi during plenary on the 16th October where she drew the attention of the parliament to such financial dealings by the NNPC.

Baru explained that it will be illegal for the corporation to have a subsidy account seeing it had not been captured in the appropriation since 2016.

He, however, disclosed that there is $1.05 billion available to the NNPC, used to cover what he calls under-recoveries, which are payments for the cost differentials in the landing cost and the actual pump price of the product.

He explained that $1.05 billion which is equivalent of N383.2 billion taken from LNG dividends is domiciled in a special account with the Central Bank of Nigeria (CBN) called National Fuel Support Fund (NFSF) for the purposes of augmenting loses incurred from petrol pump price of N145 per litre as against N185 per litre it supposed to be.

The NNPC GMD said, “based on available parameters from landing to transportation costs, the pump price of PMS supposed to be N185 per litre as against the official price of N145 per litre, indicating shortage of N40 per litre.

“Since subsidy is not appropriated for and pump price not adjusted upwardly, NNPC had no other reason than to in line with its establishment Act, section 7 sub section 4(b), defray its costs from its revenues.”

He further explained that the $1.05billion costs of augmentation came into existence in October last year when Independent Marketers pulled out of the supply chain of importation of PMS into the country as a result of increase in landing cost without corresponding increase in pump price.

He pointed out that the issue of subsidy or pump price increase can best be tackled by the National Assembly and not the NNPC, failure of which he said, will make smuggling of petroleum products across Nigerian borders, lucrative business by smugglers.

“The N145 per litre pump price of PMS in Nigeria is the lowest when compared to N400 it is sold in Cameron, N350 in Ghana, N330 in Benin Republic etc.

“As long as the product is sold at the lowest price in Nigeria, so shall it be attractive for smugglers to trade on across the borders,” he complained.

On the consumption level of fuel product in the country, the NNPC boss, who denied knowledge of the daily consumption of the product, added that the consumption rate as at 2016 was 49m litres per day and 53m litres per day in 2017.

He said, “NNPC presently has 1.9bn litres of PMS in stock which can last the country for 39 days in case of any breakdown in the supply chain.”

In his response, the Chairman and Senate Majority Leader, Ahmed Lawan said that the Ad-hoc Committee already has its job well cut out for it.

Earlier, the representative of the Finance Ministry had denied knowledge of anything about the subsidy or how it is being expended.

The Ad-hoc Committee, has, however, requested that it be furnished with more documentation within a week on the activities of the NNPC.

The Committee adjourned till next Tuesday.

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