President Bola Tinubu has granted approval for the Nigerian National Petroleum Company (NNPC) Limited to use its 2023 final dividends to cover fuel subsidies, despite earlier denials from the government about ongoing subsidy payments. According to a report by BusinessDay, this decision comes as the NNPC faces financial strain due to the high costs of subsidies.
In addition to this, the president has also approved the suspension of 2024 interim dividend payments to the federation. This move is intended to alleviate some of the cash flow challenges currently being experienced by the NNPC.
The NNPC had earlier informed the president that subsidy payments were affecting its ability to pay taxes and royalties into the federation account. This situation, which the company referred to as a “subsidy shortfall/FX differential,” has put considerable pressure on the corporation’s finances.
A forecast report obtained by BusinessDay reveals that from August 2023 to December 2024, petrol subsidy expenses are projected to reach a staggering N6.884 trillion. As a result, the NNPC is expected to withhold N3.987 trillion in taxes and royalties that would have otherwise been remitted to the federation account.
At the time of this report, the exact amount of dividends to be withheld or suspended had not been confirmed.
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