Tinubu approves NNPCL to spend federation’s dividends on petrol subsidy
President Bola Tinubu has authorized the Nigerian National Petroleum Company (NNPC) Limited to use the 2023 final dividends owed to the federation to offset the cost of petrol subsidies, according to a report by The Cable.
The president also instructed that the 2024 interim dividends be withheld from the federal government to enhance NNPC’s cash flow.
According to an NNPC forecast cited by the publication, the total expenses for petrol subsidies from August 2023 to December 2024 are projected to reach N6.884 trillion, leaving the company unable to remit N3.987 trillion in taxes and royalties to the federation account.
Under the Petroleum Industry Act (PIA), NNPC is required to pay taxes, royalties, and dividends to the federation, which is its sole shareholder.
In June 2024, NNPC informed President Tinubu that the subsidy payments were severely affecting its cash flow, putting the company’s viability at risk.
The company expressed concerns about its ability to continue importing petrol due to the increasing subsidy burden, which it attributed to “forex pressure.”
As a result, NNPC is expected to suspend the payment of interim dividends for eight months, from May to December this year. These interim dividends, typically remitted monthly into the federation account, are shared among the three tiers of government, while the final dividends are paid at the end of the year after reconciliation.
