President Bola Tinubu has approved the use of 2023 dividends due to the federation to pay for petrol subsidy, according to TheCable. The president also approved the suspension of the payment of 2024 interim dividends to the federation to augment the Nigerian National Petroleum Company Limited’s (NNPCL) cash flow.
Despite announcing the removal of fuel subsidy during his inaugural address, there have been indications that the government still spends billions on subsidy. The Federal Government has consistently denied paying subsidy, but NNPCL complained that it had exhausted all strategies to ensure a stable supply of gasoline and requested permission to use the dividends to pay for subsidy.
The strategies included improving oil production, debt rescheduling, payment deferrals, and debt recovery. However, these strategies failed to ameliorate the problem, and NNPCL informed the president that it would no longer be able to remit funds into the Federation Account.
Tinubu directed NNPCL to use taxes, royalties, and other funds supposed to be remitted to the Federation Account to defray the fuel subsidy cost. The approval was given on June 6, 2024. A forecast from NNPCL indicated that the total petrol subsidy expenses from August 2023 to December 2024 will amount to N6.884 trillion, leaving the company unable to remit N3.987 trillion in taxes and royalties to the federation account.
