President Bola Ahmed Tinubu has granted the Nigerian National Petroleum Company Limited (NNPCL) permission to use its 2023 dividends for paying fuel subsidies. This approval also includes suspending the payment of 2024 interim dividends to help manage the company’s cash flow.
Although Tinubu announced the removal of fuel subsidies in his inaugural address on May 29, 2023, recent reports suggest that the government continues to spend on subsidies. The Federal Government has consistently denied ongoing subsidy payments, despite public protests calling for its reinstatement.
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NNPCL’s request came after the company faced significant financial strains despite its efforts to stabilize gasoline supply. These efforts included improving oil production, combating theft and vandalism, and deferring non-essential projects. Despite these measures, NNPCL reported that it had exhausted its strategies and could no longer remit necessary funds to the federation account.
The approval, made on June 6, 2024, indicates that the total fuel subsidy costs from August 2023 to December 2024 could reach approximately N6.884 trillion. This situation will result in a shortfall of N3.987 trillion in taxes and royalties that NNPCL would have otherwise paid to the federation account. The exact amount of dividends affected by this decision is yet to be confirmed.
Source: TheCable
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