The minister made the revelation at a workshop on the Harmonization of Liquefied Petroleum Gas (LPG) Regulatory Requirements in Abuja.
He said, “The need for clean energy is very essential. We need to move away from the complete (reliance) of our transport sector on PMS. It is creating a lot of under-recovery of over N1.4 trillion around exposures to the government,” the minister said.
He added that, “the earlier we can begin to move into other components of cleaner fuels and rely less on PMS, the safer it will be. The issues of fuel queues will disappear.”
Daily Trust reports that there has been controversy over whether to classify the under-recovery on PMS as outright subsidy or just business losses.
The amount announced by the minister is more than the average N1 trillion appropriated and spent yearly as subsidy payments from 2006 to 2016 when the subsidy scheme was administered.
NNPC has severally explained that there was N774 million under-recoveries in the importation and sale of PMS but the burden was categorized as business losses which the Act establishing NNPC recognizes.
The losses, from the PMS imports, according to the corporation, could not be classified as subsidy since it was not appropriated for by the National Assembly.
Minister of Finance, Mrs. Kemi Adeosun, while answering questions from journalists in Abuja recently explained that there was no subsidy but under-recovery because the NNPC was currently doing all the importation.
“They are importing at a higher price than they are selling, which means they are losing money, which means effectively that that loss is being borne by everybody and effectively it reflects in the Federation Account,” she said.
“So, there is no subsidy payment in the way the old subsidy scheme used to work where they were paying the oil marketers, but there is an under recovery, a loss on the importation of the PMS being borne by the NNPC and therefore indirectly being borne by everyone one of us,” she said.
Kachikwu when asked in an interview with journalists after the LPG workshop to confirm the N1.3 trillion under-recovery figure said, “Yes, currently!”
When asked to give details the minister said “let me focus on the gas issue, that (under-recovery) is being addressed at a very high level and I am sure if you talk with NNPC to give a lot more detail on that. I don’t want to work that issue here,” he said.