NNPCL To Stop Payment To Fed A/C, As Tinubu Orders Return Of Fuel Subsidy

President Bola Ahmed Tinubu has ordered the Nigerian National Petroleum Company Limited, NNPCL, to return fuel subsidy fully, The Cable has reported.

Tinubu, had at his inaugural as President on May 29, 2023, ordered the end to fuel subsidy payment to oil marketers, in his now famous “subsidy is gone” speech, even though analysts in the energy sector insist that subsidy is still being paid by the federal government.

The government has denied the suggestion that marketers are still being paid subsidy on petrol.

According to the newspaper, the president gave the government oil company the nod after NNPCL complained that it has exhausted all strategies to ensure stable supply of gasoline in the country.

The strategies included improving oil production by fighting theft and vandalism, debt rescheduling/forward sales, payment deferrals to suppliers and contractors, deferrals of non-critical projects, and debt recovery, amongst others.

These strategies, the Mele Kyari-led NNPCL informed the president during the week have failed to ameliorate the problem, saying going forward the company will no longer be able to remit funds into the federation Account.

President Tinubu has therefore directed the company to use the taxes, royalties, and other funds that are supposed to be remitted to the Federation Account to defray the fuel subsidy cost, the report said.

An NNPC forecast seen by the newspaper showed that the cumulative petrol subsidy bill from August 2023 will hit N6.884 trillion by December 2024 — leaving the national oil company unable to remit N3.987 trillion in taxes and royalties to the federation account.

TheCable could not confirm the total amount of dividends to be withheld or suspended.

NNPC is expected to pause the payment of interim dividends for eight months this year — from May to December.

Interim dividends — based on inflow projections — are usually remitted monthly into the federation account and shared by the three tiers of government while the final dividends are paid at the end of the year after reconciliation.

Under the Petroleum Industry Act, PIA, the NNPC is obligated to pay taxes and royalties as well as dividends to the federation, its sole shareholder.

The development is coming on the heels of petrol scarcity in the country, as queues have returned to major state capitals since last week.

The magazine checks revealed that petrol price has increased to over N1,200 per litre from N620 it was sold before the scarcity began in filling stations.

The problem has aggravated vehicular traffic in places like Lagos and Abuja, leading to frustration from motorists and commuters whose movements have been highly inhibited.