Tinubu approves drastic move by the NNPC

President Bola Tinubu has given the Nigerian National Petroleum Company (NNPC) Limited the green light to utilize the 2023 final dividends owed to the federation to offset the mounting cost of petrol subsidies.

This decision comes as the NNPC grapples with a staggering N6.884 trillion subsidy bill projected to accumulate from August 2023 to December 2024.

The financial strain is so severe that NNPC has warned it might not be able to maintain petrol imports, citing the overwhelming “forex pressure” as a key factor. The subsidy burden has not only drained NNPC’s cash flow but also jeopardized its ability to remit N3.987 trillion in taxes and royalties to the federation account, obligations mandated under the Petroleum Industry Act (PIA).

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To mitigate the cash flow crisis, President Tinubu has also halted the payment of 2024 interim dividends to the Federal Government, effectively pausing the usual monthly remittances that are vital to the federation account. This pause will last eight months, from May to December 2024, raising concerns about the financial stability of the three tiers of government that rely on these funds.

As the NNPC struggles to stay afloat, the decision to divert dividends to cover subsidies signals a critical juncture for Nigeria’s oil industry. The pressing question now is: how long can this financial juggling act continue before the system collapses under its own weight?