President Bola Tinubu has approved the request of the Nigerian National Petroleum Company Limited (NNPCL) to use the 2023 dividends due to the federation to pay for petrol subsidy.
The president also approved the suspension of the payment of 2024 interim dividends to the federation in order to augment the oil firm’s cash flow.
Although Tinubu announced the removal of fuel subsidy during his inaugural address on May 29, 2023, there have been strong indications that government still spends billions on subsidy.
However, the Federal Government has consistently denied paying subsidy.
Weeks ago when some Nigerians hit the streets to protest nationwide hardship, one of their demands was the reinstatement of subsidy.
But in his national broadcast, Tinubu ruled out return of subsidy, describing the decision to remove fuel subsidy as painful but necessary.
He said it had been a “noose around the economic jugular of our Nation” and had hindered economic development and progress.
In a report on Monday, the online newspaper stated that Tinubu gave NNPCL the nod to pay for subsidy after it complained that it had exhausted all strategies to ensure a stable supply of gasoline in the country.
The strategies included improving oil production by fighting theft and vandalism; debt rescheduling/forward sales; payment deferrals to suppliers and contractors; deferrals of non-critical projects; and debt recovery, amongst others.
“These strategies, the government oil company informed the president have failed to ameliorate the problem, saying going forward, the company would no longer be able to remit funds into the federation Account.”
“President Tinubu has therefore directed the company to use the taxes, royalties, and other funds that are supposed to be remitted to the Federation Account to defray the fuel subsidy cost,” the report said.
The approval was said to be given on June 6, 2024.
A forecast from NNPCL, obtained by the newspaper, indicated that the total petrol subsidy expenses from August 2023 to December 2024 will amount to N6.884 trillion, leaving the company unable to remit N3.987 trillion in taxes and royalties to the federation account.
The exact amount of dividends that would be withheld or put on hold could not be verified.