President Tinubu Gives Nod For Fuel Subsidy Payment

President Bola Ahmed Tinubu has sanctioned the Nigerian National Petroleum Company Limited (NNPCL)’s request to allocate the 2023 dividends towards the petroleum subsidy.

Furthermore, the President has authorized the deferral of the 2024 interim dividends to the federation, aiming to bolster the oil company’s liquidity.

Despite President Tinubu’s announcement of the discontinuation of fuel subsidy during his inaugural speech on May 29, 2023, there have been compelling indications that the government continues to allocate billions towards subsidy payments.

Nonetheless, the Federal Government has maintained its stance of non-payment towards fuel subsidies.

In the recent past, as some Nigerians took to the streets to voice their grievances over widespread hardship, one of their primary demands was the reinstatement of fuel subsidy.

However, in his national address, President Tinubu dismissed the idea of reintroducing fuel subsidy, characterizing the decision to eliminate fuel subsidy as a painful but essential measure.

He argued that the fuel subsidy had become a “noose around the economic jugular of our Nation,” impeding economic growth and development.

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However, in a press release dated Monday, The Nation reported that President Tinubu has authorized the Nigerian National Petroleum Corporation (NNPC) to proceed with the payment of subsidies following a formal complaint from the corporation, which had reported having exhausted all viable strategies to guarantee a consistent supply of gasoline nationwide.

These strategies encompassed a range of measures aimed at enhancing oil production, including combating theft and vandalism; restructuring or forward selling debt; deferring payments to suppliers and contractors; postponing the commencement of non-essential projects; and pursuing debt recovery efforts, among other tactics.

“These strategies, the government oil company informed the president have failed to ameliorate the problem, saying going forward, the company would no longer be able to remit funds into the federation Account.

“President Tinubu has therefore directed the company to use the taxes, royalties, and other funds that are supposed to be remitted to the Federation Account to defray the fuel subsidy cost,” the report said.

The authorization was officially announced on June 6, 2024.

A projection provided by NNPCL, which was acquired by the media outlet, suggests that the aggregate expenditure on petrol subsidies from August 2023 to December 2024 is projected to reach N6.884 trillion. This figure places the company in a position where it will be unable to fulfill its tax and royalty obligations to the federation account, amounting to N3.987 trillion.

The precise sum of dividends that may be withheld or deferred could not be confirmed.