Tinubu approves payment of fuel subsidy

President Bola Tinubu has authorized the Nigerian National Petroleum Company Limited (NNPCL) to use the 2023 dividends allocated to the federation for funding the petrol subsidy.

This decision also involves halting the 2024 interim dividend payments to the federation to bolster the oil company’s cash reserves.

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Although Tinubu declared the removal of fuel subsidies in his inaugural address on May 29, 2023, it appears that the government continues to allocate significant funds for this purpose.

The Federal Government, however, has denied any ongoing subsidy payments.

Recently, some Nigerians took to the streets to protest the economic hardships, demanding the return of fuel subsidies.

In response, Tinubu reaffirmed his stance against reinstating the subsidies, describing the previous subsidy regime as a financial burden that hindered national development.

NNPCL reported that it had exhausted all possible strategies to maintain a steady fuel supply, including enhancing oil production, combating theft and vandalism, rescheduling debts, deferring non-critical projects, and recovering debts.

Despite these efforts, the company informed the president that it could no longer remit funds to the Federation Account and requested permission to use the designated funds to cover the subsidy costs.

Tinubu approved this request on June 6, 2024.

According to NNPCL’s forecast, petrol subsidy expenses from August 2023 to December 2024 are expected to reach N6.884 trillion, which will result in the company withholding N3.987 trillion in taxes and royalties that would have been remitted to the federation.

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The exact amount of dividends affected by this decision remains unconfirmed.