President Tinubu approves use of NNPC dividends for petrol subsidies

 

President Bola Tinubu has authorized the Nigerian National Petroleum Company (NNPC) Limited to use the 2023 final dividends owed to the federation to cover the cost of petrol subsidies.

This decision, reported by The Cable, comes as part of efforts to manage the financial strain caused by the subsidy payments.

In addition to this, President Tinubu has instructed the NNPC to halt the payment of 2024 interim dividends to the Federal Government to help alleviate the company’s cash flow issues. According to a forecast seen by The Cable, the total petrol subsidy expenses from August 2023 to December 2024 are projected to reach N6.884 trillion. As a result, the NNPC may be unable to remit N3.987 trillion in taxes and royalties to the federation account.

READ ALSO: President Tinubu to embark on Paris trip aboard new presidential jet

The Petroleum Industry Act (PIA) mandates the NNPC to pay taxes, royalties, and dividends to the federation, which is its sole shareholder. However, in June 2024, the NNPC informed President Tinubu that the escalating subsidy payments were severely affecting its cash flow and threatening its viability as a “going concern.” The company expressed concerns about its ability to sustain petrol imports due to the growing subsidy burden, which it attributed to “forex pressure.”

As part of the response to these challenges, the NNPC is expected to pause the payment of interim dividends from May to December 2024. These interim dividends, which are typically remitted monthly into the federation account, are shared among the three tiers of government. The final dividends are paid at the end of the year after financial reconciliation.

This move by the president reflects the ongoing efforts to address the financial challenges posed by the subsidy regime and ensure the NNPC can continue to operate effectively amid these pressures.