President Bola Tinubu has granted approval for the Nigerian National Petroleum Company Limited (NNPCL) to utilize its 2023 dividends to cover the expenses of petrol subsidies. These dividends, originally earmarked for distribution among the three tiers of government via the federation account, will now be redirected to address the financial strain of the subsidy.
This decision comes as a contrast to earlier statements from the federal government, which had claimed that petrol subsidies were no longer in effect following President Tinubu’s announcement on May 29, 2023. Nevertheless, the Minister of Finance, Wale Edun, recently hinted that the difference between the landing cost of petrol and its retail price is being managed by an undisclosed entity.
In addition to this, President Tinubu has approved the suspension of the 2024 interim dividend payments to the federation account to support NNPC’s cash flow during this period. According to NNPC’s projections, the total subsidy cost could reach ₦6.884 trillion by December 2024, leading to a shortfall of approximately ₦3.987 trillion in taxes and royalties that would otherwise be remitted to the federation account. As a result, NNPC is expected to halt the payment of interim dividends from May to December 2024.
