President Bola Tinubu has authorized the Nigerian National Petroleum Company (NNPC) to use its 2023 final dividends to cover petrol subsidy costs. The decision addresses a projected N6.884 trillion subsidy expense, leading to a shortfall in tax and royalty payments. The move includes suspending 2024 interim dividends.
In a recent development, President Bola Tinubu has approved the Nigerian National Petroleum Company (NNPC) Limited’s request to use its 2023 final dividends to cover the cost of petrol subsidies. This decision, reported by BusinessDay, addresses the NNPC's inability to pay taxes and royalties due to high subsidy expenses.
According to a forecast from the NNPC, the total petrol subsidy cost from August 2023 to December 2024 is projected to reach N6.884 trillion. This substantial expenditure has left the company unable to remit N3.987 trillion in taxes and royalties to the federal account. The NNPC cited a “subsidy shortfall/FX differential” as the reason for its financial strain.
To alleviate the situation, President Tinubu has approved the suspension of 2024 interim dividends to the federation. This move aims to enhance the NNPC's cash flow amidst ongoing subsidy payments. The exact amount of dividends that will be withheld remains unclear.
Reactions to this decision have been mixed. Some commentators express skepticism about the NNPC’s financial practices and the government's handling of the subsidy issue. Others are concerned about the implications for government revenue and the broader economic impact.
As the situation unfolds, the public and stakeholders await further clarification on how this policy adjustment will affect both the NNPC’s operations and Nigeria’s fiscal stability.
