President Bola Tinubu has approved the Nigerian National Petroleum Company (NNPC) Limited to use the 2023 final dividends owed to the federation to cover the cost of petrol subsidies, the Cable reports.
It was also gathered that the president has ordered a halt on the payment of 2024 interim dividends to the FG to help boost NNPC’s cash flow.
A forecast by NNPC seen by the publication, showed that the total petrol subsidy expenses from August 2023 to December 2024 will amount to N6.884 trillion, leaving the company unable to remit N3.987 trillion in taxes and royalties to the federation account.
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.
In June 2024, NNPC told Tinubu that the subsidy payments were negatively impacting its cash flow and it was struggling to remain a “going concern”.
The company said it might not be able to sustain petrol imports because of the ballooning subsidy bill, which it blamed on “forex pressure”.
NNPC is now 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.