President Bola Ahmed Tinubu has authorized the Nigerian National Petroleum Company (NNPC) Ltd to utilize the 2023 final dividends due to the federation for petrol subsidies.
Additionally, he has approved the suspension of the 2024 interim dividends to support the oil company’s cash flow.
Despite Tinubu’s announcement of the subsidy removal in his inaugural address on May 29, 2023, evidence suggests the government continues to spend substantial amounts on fuel subsidies. The Federal Government has repeatedly denied these claims.
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Recently, protests erupted across Nigeria demanding the reinstatement of the subsidy. However, in a national broadcast, Tinubu reaffirmed his stance against reinstating the subsidy, describing its removal as a painful but essential measure to prevent further economic damage.
Tinubu approved the subsidy payment request after NNPC highlighted its inability to maintain stable gasoline supplies despite various strategies, including combating theft and vandalism, debt rescheduling, and deferring non-critical projects.
On June 6, 2024, Tinubu directed NNPC to use taxes, royalties, and other funds that would otherwise be paid into the Federation Account to cover the fuel subsidy costs.
Forecasts from NNPC estimate that subsidy expenses from August 2023 to December 2024 will total ₦6.884 trillion, resulting in a ₦3.987 trillion shortfall in remittances to the Federation Account. The exact amount of withheld or deferred dividends remains unclear.
