SAT, 07 MAY, 2022-theGBJournal | According to the recently released data from the Nigerian National Petroleum Corporation (NNPC), the corporation incurred N245.77 billion as Premium Motor Spirit (PMS) under-recovery cost in March (February: NGN219.79 billion).
The under-recovery cost for the review month consists of the previous months’ outstanding and part of the February 2022 value shortfall. The tally brings the total under-recovery cost in Q1-22 to NGN675.94 billion– 3.4x the size in Q1-21 (N197.74 billion). That said, the NNPC further estimated that it would deduct NGN671.88 billion from April proceeds due to be shared by the three tiers of government at the May FAAC meeting.
The estimated deduction consists of N519.00 billion as PMS under-recovery cost in April and NGN152.88 billion for March. We expect under-recovery costs to increase significantly over the short-to-medium term, given the rise in crude oil prices compared to the 2021FY levels.
Consequently, we estimate PMS under-recovery cost to settle at N3.55 trillion (or 56.8% of our estimated FGN’s retained revenue) in 2022E (vs 2021FY: NGN1.61 trillion or 34.3% of FGN’s retained revenue).
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