Tinubu approves payment of fuel subsidy
President Bola Tinubu has approved the use of the Nigerian National Petroleum Company Limited’s (NNPC Ltd) 2023 dividends to cover the costs associated with petrol subsidies, despite earlier declarations that fuel subsidies had been removed. This decision includes:
- Utilization of Dividends: The 2023 final dividends, which were supposed to be paid into the federation account for distribution among the three tiers of government, will now be redirected towards funding the petrol subsidy.
- Suspension of Interim Dividends: Additionally, Tinubu has approved the suspension of the payment of 2024 interim dividends to the federation. This measure aims to bolster NNPC’s cash flow, which has been strained by the ongoing subsidy payments.
- Financial Impact: The NNPC has forecasted that from August 2023 to December 2024, the total petrol subsidy expenses will amount to N6.884 trillion. This financial burden has led to the company’s inability to remit N3.987 trillion in taxes and royalties to the federation account.
- Public Sentiment and Government Stance: Despite this, the government has been inconsistent in its communication regarding the subsidy. While Tinubu announced the removal of fuel subsidies during his inauguration, there have been reports and acknowledgments from government officials and NNPC itself about ongoing payments for subsidies, albeit under different terms like “subsidy shortfall/FX differential.”
This move reflects the government’s attempt to manage the economic fallout from fuel pricing while facing criticism for what some perceive as a reversal on the promise to end fuel subsidies, highlighting the complex economic and political dynamics at play in Nigeria’s energy sector.
