Tinubu Approves Use of NNPC Dividends for Fuel Subsidy

In a recent move, President Bola Tinubu has given the green light for the Nigerian National Petroleum Company Limited (NNPCL) to use its 2023 dividends meant for the federation to help cover the costs of petrol subsidies.

This decision also includes the suspension of 2024 interim dividends to support the cash flow of NNPCL, which has been struggling with the financial burden imposed by the petrol subsidy.

Despite earlier claims by the government that fuel subsidies had been eliminated, it appears that significant funding is still being directed towards them. Protests across Nigeria recently highlighted the public’s desire for the reinstatement of subsidies, even though Tinubu previously declared that their removal was a painful yet necessary step.

The NNPCL informed Tinubu that they have explored every possible strategy to ensure a stable gasoline supply but have faced serious challenges. Their financial forecasts indicate that from August 2023 to December 2024, petrol subsidy expenses could reach a staggering N6.884 trillion, impacting the company’s ability to remit nearly N3.987 trillion in taxes and royalties to the federation account.

In the past, the removal of the petrol subsidy had allowed NNPCL to save about N400 billion monthly. However, due to recent currency devaluation, the company’s costs for fuel imports have drastically increased, leading them to seek assistance from the government once again.

According to internal communications, this financial support is now openly referred to as a ‘subsidy’, even as the Tinubu administration maintains an official stance that the subsidy is no longer in effect.