THE Nigerian National Petroleum Company Limited (NNPC) has only been remitting 50 per cent of the gains generated from the removal of petrol subsidies to the Nigerian government account, according to the World Bank in its latest report.
The report, ‘Nigeria Development Update’, released Monday, May 12, revealed that the NNPCL started transferring the revenue gains to the federation account in January this year.
“Since then, it has been remitting only 50 per cent of these gains, using the rest to offset past arrears,” the global financial institution stated.
The ICIR can report that Nigerian President Bola Tinubu, during his inaugural speech on May 29, 2023, announced the removal of costly petrol subsidies.
He desires to save the subsidy proceeds for developmental purposes. However, what many Nigerians are seeing is not the case, but they are worried about the opacity in the management of the subsidy gains.
Seemingly concerned about the opacity in the state-owned oil firm, the Nigerian government recently indicated plans to dust up the NNPCL financial records and address some misappropriation, stressing that the company needed to come to the table with more dollar revenue.
This decision came after the President had, on April 2, sacked the NNPCL Group Chief Executive Officer, Mele Kyari, along with the board members.
He invoked Section 59(2) of the Petroleum Industry Act (PIA) 2021 and said the decision was necessary to enhance operational efficiency, restore investor confidence, boost local content, and advance gas commercialisation and diversification.
Similarly, the International Monetary Fund (IMF) had last month called for transparency in the management of the Nigerian oil sector, most notably, the proceeds of the subsidy removal.
It is hoped to see a little more transparency in the oil sector to ensure that fuel subsidy removal can result in more flow of resources into government coffers.
Continuing in its report on Wednesday, the World Bank noted that for Nigeria to consolidate on gains of economic reforms, it is essential to ensure that the full revenue gains from the removal of the PMS subsidy—estimated at 2.6 per cent of gross domestic product (GDP) in 2024—are transferred to the Federation account.
Despite the subsidy being fully removed in October 2024, NNPCL started transferring the revenue gains to the Federation only in January 2025. Since then, it has been remitting only 50 per cent of these gains, using the rest to offset past arrears.
“Resolving any remaining net arrears and channelling the full benefits of subsidy reform to the Federation is critical for sound fiscal management,” the Bretton Woods financial institution stated.
It is advised that close monitoring of the 2025 budget implementation is essential, as it has overly ambitious revenue assumptions and may lead to a larger-than-anticipated fiscal deficit.
“The budget aims to boost capital spending, and this must be done sustainably, within the broader objective of fiscal consolidation to complement monetary policy and achieve an overall policy mix that maintains fiscal discipline and brings down inflation,” the World Bank said.
It believes that sustained efforts at enhancing expenditure efficiency and transparency are crucial to maximising development outcomes.
“This responsibility lies not only with the Federal Government but especially with states, which now receive more revenue (N13.8 trillion in 2024) than the Federal Government (N12.3 trillion),” the World Bank added.