Daud Olatunji
President Bola Tinubu has reportedly approved the use of the Nigerian National Petroleum Company Limited’s (NNPCL) 2023 dividends to cover fuel subsidy payments, according to a report by TheCable.
This decision appears to contradict Tinubu’s earlier stance on subsidy removal, which he declared during his inauguration speech on May 29, 2023.
Despite his strong position against fuel subsidies, describing them as a “noose around the economic jugular” of the nation, recent developments indicate that the Federal Government is still incurring significant costs in subsidizing petrol.
This revelation comes amid widespread public discontent over rising living costs, with many Nigerians recently taking to the streets to demand the reinstatement of fuel subsidies.
In response to these protests, Tinubu reaffirmed his commitment to the subsidy removal, stating that the decision was painful but necessary for the country’s economic development.
However, the report suggests that the NNPCL’s financial struggles have forced the government to reconsider its stance.
According to TheCable, NNPCL had exhausted all possible strategies to maintain a stable supply of gasoline, including increasing oil production, combating theft and vandalism, rescheduling debts, and deferring non-critical projects.
Despite these efforts, the company was reportedly unable to sustain its operations without government intervention.
Faced with this situation, NNPCL allegedly informed President Tinubu that it could no longer remit funds into the Federation Account.
In response, the president approved the use of funds meant for taxes, royalties, and other remittances to the Federation Account to cover the subsidy costs.
This directive was reportedly given on June 6, 2024.
The report also revealed that NNPCL’s forecasted subsidy expenses from August 2023 to December 2024 would amount to N6.884 trillion.
As a result, the company is expected to withhold N3.987 trillion in taxes and royalties, further straining the Federation Account.
The exact amount of dividends that will be withheld remains unclear.
This development raises questions about the government’s commitment to subsidy removal and its implications for Nigeria’s fiscal stability.
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