Tinubu Bows To Pressure, Approves Request for Petrol Subsidy, NNPC Gives Details
- President Tinubu has approved the use of NNPC’s 2023 final dividends to cover petrol subsidy costs
- This means NNPC Limited will not be paying dividends to the federal government for the second year since it became a commercial company
- Since the removal of the petrol subsidy, Nigerians have been buying fuel for as much as N1,000 per litre in some states
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Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
President Bola Ahmed Tinubu has reportedly approved a request from the Nigerian National Petroleum Company Limited (NNPC Ltd) to utilise the 2023 final dividends owed to the federation to cover the costs of petrol subsidy payments.
This decision comes amid rising fuel prices and scarcity, with Nigerians paying between N750 and as much as N1,000 per litre for fuel from the previous rate of N620.
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A dividend is a distribution of profits by a corporation to its shareholders.
NNPC Ltd now operates as a commercial company, and its shares are held by the Ministry of Finance Incorporated and Ministry of Petroleum Incorporated in equal portions on behalf of the Federal Government.
Thus, NNPC Limited’s shares remain fully owned by the Federal Government pending a public offering, which is anticipated in the future.
No money to federal government account
TheCable reports that the president has sanctioned a halt on the payment of 2024 interim dividends to the federation.
This measure is intended to enhance NNPC’s cash flow, allowing the company to manage the financial burden imposed by the ongoing subsidy payments.
NNPC Limited had approached the federal government explaining the financial strain caused by ongoing as the reason it is currently unable to remit taxes and royalties into the federation account, BusinessDay reports
The company described this situation as a “subsidy shortfall/FX differential,” highlighting its challenges in balancing its financial obligations with the subsidy program.
The total expenditure on petrol subsidies from August 2023 to December 2024 is projected to reach a staggering N6.884 trillion.
As a result, the company anticipates it will be unable to remit N3.987 trillion in taxes and royalties to the federation account during this period.
The new revelation raises questions about President Tinubu’s May 2029 address, in which he declared that the subsidy is gone.
Dangote, 7 other refineries set to produce
Legit.ng earlier reported that data from the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) showed about eight Nigerian refineries are expected to commence operations in August 2024.
The refineries’ combined capacity is estimated at 864,500 barrels per day, which places a huge demand on the NUPRC for crude oil.
Some refineries, including the Port Harcourt refinery, Waltersmith Refinery, the Dangote Refinery, and others, demand about 597,700 barrels of crude oil from the oil regulator.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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