President Bola Tinubu has approved the use of Nigerian National Petroleum Company Limited’s (NNPC) 2023 dividends to cover fuel subsidy payments, as the company faces a significant cash flow crisis. The decision also includes suspending the 2024 interim dividends to the federation to support NNPC’s financial stability.
This move follows Tinubu’s previous announcement in May 2023 to remove fuel subsidies to reduce government spending. However, the NNPC has reported that ongoing financial pressures, exacerbated by the devaluation of the naira and rising global oil prices, have made it challenging to continue fuel imports and meet other obligations.
NNPC CEO Mele Kyari informed the president that despite efforts to manage costs—such as boosting oil production, deferring projects, and restructuring debts—the company remains unable to remit taxes and royalties to the federation account. The subsidy costs are projected to reach N6.884 trillion by the end of 2024, making it difficult for the NNPC to sustain operations without additional financial support.
With this approval, the NNPC aims to maintain fuel supply stability in the short term, but the decision raises questions about the sustainability of ongoing subsidies and their impact on the nation’s economy.
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