President Bola Tinubu has granted the Nigerian National Petroleum Company (NNPC) Ltd.’s request to use the federation’s 2023 final dividends to cover the cost of the gasoline subsidy.
According to sources close to the presidency, the president also gave his approval to postpone paying the federation’s 2024 interim dividends in order to improve NNPC’s financial flow.
Furthermore, the national oil corporation informed the president that the subsidy payments which it referred to as a “subsidy shortfall/FX differential” will prevent it from sending taxes and royalties to the federation account for the time being.
An NNPC forecast showed that the cumulative petrol subsidy bill from August 2023 will hit N6.884 trillion by December 2024 leaving the national oil company unable to remit N3.987 trillion in taxes and royalties to the federation account.
NNPC is expected to pause the payment of interim dividends for eight months this year from May to December.
Interim dividends based on inflow projections are usually remitted monthly into the federation account and shared by the three tiers of government while the final dividends are paid at the end of the year after reconciliation.
Under the Petroleum Industry Act (PIA), the NNPC is obligated to pay taxes and royalties as well as dividends to the federation, its sole shareholder.
