The Nigerian National Petroleum Company Limited (NNPCL) has shed light on its decision to not remit any funds to the Federation Account in 2022. In a revealing 5.24-minute video released recently, Umar Ajiya, the Chief Financial Officer of NNPCL, articulated the reasons behind this unprecedented move.

Ajiya attributed the absence of remittance to the hindrance caused by fuel subsidy, which prevented the company from paying taxes and royalties to the Federation Account and impeded its ability to generate profits. According to him, the abolition of the fuel subsidy under a new administration rescued the company from the brink of bankruptcy and set it on a trajectory towards financial prosperity. As a result, NNPCL’s profits surged from N674.1 billion in 2021 to an impressive N2.54 trillion by the third quarter of 2022.

Elaborating on the impact of the subsidy, Ajiya highlighted President Bola Tinubu’s announcement that the subsidy had ceased, leading to monthly savings of approximately N400 billion for Nigeria. This revelation underscored the gravity of the situation, as it became apparent that the entirety of the company’s earnings was being absorbed by the subsidy, leaving nothing for remittance to the Federation Account.

Ajiya emphasized the company’s inability to contribute to the Federation Account, stating, “It was unpalatable, but we can’t give what we don’t have.” He went on to delineate the unsustainable nature of using NNPC’s cash flows from other operations to offset the impacts of the subsidy, cautioning that such measures could not be extended beyond June 2023.