President Bola Tinubu has given the Nigerian National Petroleum Company Limited (NNPCL) the go-ahead to use the 2023 dividends meant for the federation to fund the petrol subsidy.
As part of this decision, the 2024 interim dividend payments to the federation will be stopped to help the oil company increase its cash reserves.
Although Tinubu announced the end of fuel subsidies in his speech on May 29, 2023, the government continues to allocate large sums of money for this purpose. However, the Federal Government denies that any subsidies are still being paid.
Recently, some Nigerians protested against economic difficulties, calling for the return of fuel subsidies. In response, Tinubu stood firm on not bringing back the subsidies, calling the previous system a financial burden that held back national progress.
NNPCL stated that it had tried everything possible to keep a steady fuel supply, such as boosting oil production, fighting theft and vandalism, rescheduling debts, delaying non-essential projects, and recovering debts.
Despite these efforts, the company informed the president that it could no longer send funds to the Federation Account and asked for permission to use the set-aside funds to cover the subsidy costs. Tinubu approved this request on June 6, 2024.
NNPCL predicts that petrol subsidy costs from August 2023 to December 2024 will reach N6.884 trillion, leading the company to withhold N3.987 trillion in taxes and royalties that would have been sent to the federation.
