President Bola Tinubu has authorised the Nigerian National Petroleum Company Limited (NNPCL) to allocate the 2023 dividends designated for the federation towards funding the petrol subsidy.
Additionally, the 2024 interim dividend payments to the federation will be suspended to enhance the oil company’s cash reserves.
This move comes despite Tinubu’s announcement of fuel subsidy removal during his inaugural address on May 29, 2023. However, the government appears to continue allocating substantial funds for this purpose, even as it denies any ongoing subsidy payments.
Recently, protests erupted across the country, with citizens demanding the reinstatement of fuel subsidies due to worsening economic conditions. In response, President Tinubu reiterated his position against restoring the subsidies, labelling the previous regime a financial drain that impeded national development.
NNPCL has reportedly exhausted all available measures to maintain a stable fuel supply, including increasing oil production, combating theft and vandalism, rescheduling debts, deferring non-essential projects, and recovering outstanding debts.
Despite these efforts, the company informed President Tinubu that it could no longer remit funds to the Federation Account and requested permission to use the designated dividends to cover the subsidy costs. Tinubu granted this approval on June 6, 2024.
According to NNPCL’s projections, the petrol subsidy expenses from August 2023 to December 2024 are expected to reach N6.884 trillion. This will result in the company withholding N3.987 trillion in taxes and royalties that would otherwise have been remitted to the federation.
The exact number of dividends affected by this decision has not yet been confirmed.
