PresidenT Bola Tinubu has approved the Nigerian National Petroleum Company (NNPC) Ltd’s request to use the 2023 final dividends due to the federation to cover petrol subsidy payments.
The president also sanctioned the suspension of 2024 interim dividends to support NNPC’s cash flow, as the national oil company struggles with the financial burden of the petrol subsidy. The NNPC informed the president that it would be unable to remit taxes and royalties to the federation account due to these subsidy payments, which it termed “subsidy shortfall/FX differential.”
NNPC’s financial forecast reveals that the cumulative petrol subsidy bill from August 2023 to December 2024 will reach N6.884 trillion, leaving the company unable to remit N3.987 trillion in taxes and royalties to the federation. The company had previously warned President Tinubu in June 2024 that the subsidy payments were severely impacting its cash flow, making it difficult to sustain petrol imports due to “forex pressure.”
The NNPC explained that the removal of the petrol subsidy in June 2023 initially led to monthly savings of N400 billion for the federation, enabling the company to remit N2.032 trillion in taxes and royalties by January 2024.
