President Bola Tinubu has granted the Nigerian National Petroleum Company (NNPC) Ltd permission to use the 2023 final dividends owed to the federation to cover petrol subsidy costs, ChatnewsTV reports. Additionally, the president also approved the suspension of the 2024 interim dividend payments to the federation, allowing NNPC to improve its cash flow.
ChatnewsTV recalls, that national oil company has informed the president that it will temporarily halt the remittance of taxes and royalties to the federation account due to the financial burden of the petrol subsidy, described as a “subsidy shortfall/FX differential.” An NNPC projection revealed that the total petrol subsidy bill from August 2023 to December 2024 is expected to reach N6.884 trillion, which will prevent the company from remitting N3.987 trillion in taxes and royalties during this period.
Although ChatnewsTV could not confirm the exact amount of dividends to be withheld or suspended, it was noted that NNPC plans to pause interim dividend payments for eight months, from May to December 2024. These interim dividends, typically remitted monthly to the federation account, are usually distributed among the three tiers of government, while final dividends are paid at the end of the year after reconciliation.
Under the Petroleum Industry Act (PIA), NNPCL is required to pay taxes, royalties, and dividends to the federation, which is its sole shareholder.
SAVE OUR SOUL: NNPC Appeals to Tinubu Over Subsidy Impact
In June 2024, the Nigerian National Petroleum Company Limited (NNPCL) raised alarm bells with President Tinubu, expressing deep concerns about the crippling effect of subsidy payments on its cash flow. The company warned that it was on the brink of financial instability due to the unsustainable costs of subsidizing petrol imports, further exacerbated by mounting foreign exchange pressures.
It is worth recalling that Mele Kyari, NNPC’s Group CEO, had earlier informed President Tinubu that the removal of the subsidy in June 2023 led to substantial monthly savings of N400 billion for the federation. This financial respite enabled the NNPCL to remit taxes and royalties totaling N2.032 trillion into a sequestered account at the Central Bank of Nigeria (CBN) by January 2024.
However, despite these savings, the lingering financial strain from past subsidy payments has forced the NNPCL to seek urgent intervention from President Tinubu.
By Ebubedike Ochu
