President Bola Tinubu has authorized the Nigerian National Petroleum Company (NNPC) Ltd to utilize the 2023 final dividends due to the federation for petrol subsidy payments, The Cable reports.
This move comes as the NNPC faces severe financial challenges due to the petrol subsidy, leading to the suspension of 2024 interim dividends to alleviate the company’s cash flow issues.
The NNPC has disclosed that it will be unable to remit taxes and royalties to the federation account, citing a “subsidy shortfall/FX differential” as the primary reason.
The company’s financial forecast predicts that the cumulative petrol subsidy bill from August 2023 to December 2024 will reach N6.884 trillion, resulting in a shortfall of N3.987 trillion in taxes and royalties.
The financial burden has intensified following the naira’s devaluation, which has significantly inflated the subsidy costs.
While the presidency had previously denied any plans to reinstate the subsidy, internal NNPC communications now refer to the ongoing financial support as a “subsidy.”
Despite the official stance that “subsidy is gone,” the administration faces mounting pressure as the NNPC projects subsidy costs could surpass N5 trillion in 2024.
