President Bola Tinubu has given the go-ahead for the Nigerian National Petroleum Company (NNPC) Ltd to use the 2023 final dividends owed to the federation to cover petrol subsidy costs, according to TheCable.
The president has also agreed to postpone the payment of the 2024 interim dividends to the federation to support NNPC’s cash flow.
Furthermore, the national oil company has informed the president that it cannot transfer taxes and royalties to the federation account at the moment due to the petrol subsidy payments, which it referred to as “subsidy shortfall/FX differential”.
According to an NNPC forecast, the total petrol subsidy bill is expected to reach N6.884 trillion by December 2024, making it impossible for the national oil company to transfer N3.987 trillion in taxes and royalties to the federation account.
The exact amount of dividends to be withheld or postponed has yet to be determined.
NNPC will cease paying interim dividends for eight months this year, from May to December.
Typically, interim dividends, based on revenue projections, are transferred monthly to the federation account and distributed among the three tiers of government, while the final dividends are disbursed at the end of the year after reconciliation.