President Tinubu Endorses Controversial Move Amid Economic Strains
In a significant development, President Bola Tinubu has approved the Nigerian National Petroleum Company Limited's (NNPCL) request to utilize the 2023 dividends owed to the federation for the payment of fuel subsidies. This decision, reported by TheCable, was made after the NNPC informed the president that it had exhausted all possible measures to maintain a stable fuel supply in the country.
The approval, reportedly granted on June 6, 2024, comes as a notable reversal of Tinubu’s earlier stance on fuel subsidies. During his inaugural address on May 29, 2023, Tinubu declared the removal of the fuel subsidy, describing it as a necessary action to free Nigeria from what he termed a “noose around the economic jugular of our Nation.” Despite this, evidence has surfaced suggesting that the government has continued to incur significant expenses on subsidies, a claim that the Federal Government has consistently denied.
NNPCL’s request to divert dividends was driven by its inability to sustain fuel supply through conventional means. The company had attempted various strategies to stabilize the market, including fighting oil theft and vandalism, rescheduling debts, deferring non-essential projects, and recovering outstanding debts. However, these measures proved insufficient, prompting the request for an alternative solution.
“The president has directed the company to use the taxes, royalties, and other funds that were originally intended for the Federation Account to cover the fuel subsidy costs,” the report cited an official statement.
According to NNPCL’s forecast, the total cost of petrol subsidies from August 2023 to December 2024 is expected to reach N6.884 trillion, severely impacting the company’s ability to remit approximately N3.987 trillion in taxes and royalties to the Federation Account.
The decision to approve the subsidy payments using the 2023 dividends has sparked concern among economic analysts and stakeholders, given the president’s previous commitment to ending the subsidy regime. This move may also have significant implications for the government's revenue streams and economic stability, especially as the country faces mounting fiscal challenges.
While the exact amount of the dividends to be withheld remains unverified, the approval underscores the complexities of managing Nigeria’s fuel supply and the ongoing debate over subsidy reforms. The situation is likely to draw further scrutiny as citizens and policymakers alike weigh the long-term economic consequences of this decision.
This development comes on the heels of recent protests across Nigeria, where citizens expressed their dissatisfaction with rising living costs and demanded the reinstatement of the fuel subsidy. In response, President Tinubu ruled out a return to the previous subsidy regime, emphasizing the need for the nation to move forward without it, despite acknowledging the hardships it has caused.
As the situation evolves, all eyes will be on the Federal Government's next steps in addressing both the immediate and long-term challenges posed by this critical issue.
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