President Bola Tinubu has granted the Nigerian National Petroleum Company (NNPC) Limited permission to utilize the 2023 final dividends owed to the federation to cover the cost of petrol subsidies, according to reports from The Cable.
In addition, the president has ordered a suspension of the 2024 interim dividend payments to the Federal Government, aiming to enhance NNPC’s cash flow. A forecast by NNPC, referenced in the report, reveals that petrol subsidy expenses from August 2023 to December 2024 are projected to reach N6.884 trillion. This substantial expenditure is expected to leave the company unable to remit N3.987 trillion in taxes and royalties to the federation account.
Under the Petroleum Industry Act (PIA), NNPC is required to pay taxes, royalties, and dividends to the federation, which serves as its sole shareholder.
In June 2024, NNPC alerted President Tinubu that the ongoing subsidy payments were severely impacting its cash flow, raising concerns about the company’s ability to continue as a “going concern.” The company also indicated that it might struggle to sustain petrol imports due to the mounting subsidy costs, which it attributed to "forex pressure."
As a result, NNPC is now expected to suspend the payment of interim dividends for eight months, from May to December 2024. These interim dividends, typically remitted monthly into the federation account, are usually shared among the three tiers of government. Final dividends, on the other hand, are paid at the end of the year after reconciliation.
