Subsidy: Tinubu approves payment despite earlier removal

Despite earlier removal, President Bola Tinubu has reportedly approved the payment of petrol subsidies by the Nigerian National Petroleum Company Limited, NNPCL.

According to a report by TheCable, the decision comes after the NNPCL requested to use the 2023 dividends due to the federation for subsidy payments, citing financial challenges.

,,,,,,In addition to approving the use of dividends, President Tinubu has also suspended the payment of 2024 interim dividends to the federation to support NNPCL’s cash flow.

……This development is surprising given Tinubu’s earlier announcement during his May 29, 2023, inaugural address, where he declared the removal of fuel subsidies.

Despite this, there have been ongoing reports that the government continues to spend billions on subsidies, a claim the Federal Government has consistently denied.

,,,,,,,Public discontent over the removal of subsidies has been palpable, with protests erupting nationwide in response to the resulting economic hardship.

In a recent national address, President Tinubu acknowledged the difficulties….caused by the subsidy removal, describing it as a “painful but necessary” decision that was essential for the country’s economic development.

,,,,,,,The report indicates that NNPCL had exhausted several strategies to maintain a stable gasoline supply, including efforts to boost oil production, combat theft, reschedule debts, defer payments, and recover debts.

However, these measures have not resolved the situation, leading the company to inform the president that it……would no longer be able to remit funds into the Federation Account.

,,,,,,,,In response, President Tinubu authorized NNPCL to use taxes, royalties, and other funds typically remitted to the Federation Account to cover the fuel subsidy costs. This approval was reportedly granted on June 6, 2024.

,,,,,,A forecast from NNPCL, obtained by TheCable, estimates that petrol subsidy expenses will total N6.884 trillion from August 2023 to December 2024, which will prevent the…..company from remitting N3.987 trillion in taxes and royalties to the federation.

,,,,,,,,,,,,The exact amount of dividends that will be withheld or delayed remains unclear.