President Bola Tinubu has approved the Nigeria National Petroleum Company Limited (NNPCL)’s request to use its 2023 dividends to cover the cost of petrol subsidies. These dividends, originally meant to be paid into the federation account and shared among the three tiers of government, will now be redirected. This decision comes amid ongoing denials by the federal government of the existence of a petrol subsidy, despite the President’s earlier statement declaring that “subsidy is gone” on May 29, 2023.
Additionally, the President has approved the suspension of the 2024 interim dividends to the federation to help NNPCL manage its cash flow. The national oil company has informed the President that it cannot remit taxes and royalties to the federation account due to the financial strain caused by the subsidy payments. Forecasts indicate that the petrol subsidy bill could reach ₦6.884 trillion by December 2024, resulting in NNPCL being unable to remit ₦3.987 trillion in taxes and royalties.
NNPCL is expected to pause interim dividend payments from May to December 2024. This situation reflects the significant financial impact of the ongoing subsidy on the national oil company’s operations and its ability to fulfill its financial obligations to the federation account.