According to a report by TheCable, President Bola Tinubu has directed the Nigerian National Petroleum Company Limited (NNPCL) to draw on dividends accruing to the federation from 2023 to cover fuel subsidy expenses. The decision was made against the backdrop of NNPCL’s struggles with maintaining consistent petrol availability, due to oil theft, vandalism, and indebtedness issues.
Despite announcing, during his inaugural speech on May 29, 2023, that fuel subsidy would be scrapped, the federal government still incurs huge sums for subsidy payments. This presidential approval intends to alleviate the social implications on the economy, due to the banning of fuel subsidies.
The NNPCL has gone through all conceivable strategies for boosting supply stability, including improving oil production rates; putting off debt repayments or rescheduling them; and spending less money than needed.
However, these weren’t enough, leading President Tinubu to approve the use of tax money from taxes, royalties, and money meant for the federation account, which are meant for anything else apart from covering petrol grants’ costs.
The approval, given on June 6, 2024, allows NNPCL to access its 2023 returns in order to pay off its burning fuel subsidies, while halting the transit charge on interim dividends for the federation till year 2024.
The total expense of petroleum subsidies from August 2023 till December 2024 is projected to be N6.884 trillion. This means that NNPCL can no longer submit taxes amounting to N3.987 trillion, even as it repays debts already incurred.
