NNPC’s N2.6tn Fuel Subsidy Claims Face External Audit Review

NNPC’s N2.6tn Fuel Subsidy Claims Face External Audit Review

The Federal Government has commenced the process of hiring an external auditor to verify the Nigerian National Petroleum Company Limited’s (NNPC) fuel subsidy claim, which amounts to N2.7 trillion, according to The PUNCH. The selected auditor, whose identity has not yet been disclosed, will collaborate with the Office of the Auditor-General of the Federation to accurately determine the amount owed by the government……CONTINUE READING 

This initiative follows five months after the proposal was first introduced during the Federation Allocation Accounts Committee (FAAC) meeting in April 2024. Initially, NNPC claimed it was owed N6 trillion, but this figure was reduced to N2.7 trillion after a preliminary audit conducted by KPMG.

The PUNCH previously reported that the audit would cover the period from 2015 to 2021. Although updates have been provided by the Director of Home Finance at the Ministry of Finance, Ali Mohammed, during FAAC meetings, the recent decision to engage an external auditor suggests that no significant progress has been made in auditing the claim.

On May 30, 2023, shortly after President Bola Tinubu announced the end of fuel subsidies, NNPC’s Group Chief Executive Officer, Mele Kyari, informed State House correspondents that the Federal Government still owed the company N2.8 trillion for petrol subsidies. Kyari explained that NNPC had been covering the subsidy costs from its own cash flow, as the government had been unable to settle the debt.

Minutes from a recent FAAC meeting obtained in Abuja indicate that the Ministry of Finance’s procurement department has initiated the process of selecting an external auditor. The minutes state, “On the forensic audit covering the period 2015 to 2021 to Authenticate NNPC/Federation Claims in Respect of N2.7tn withheld by NNPC Limited: The Director of Home Finance reported that the Office of the Auditor-General of the Federation was still working on the matter, adding that the Procurement Department of the Ministry had also put structures in place for the engagement of an external auditor, who would assist OAuGF to carry out the assignment.”

In response, the Chairman of the Commissioners’ Forum/HCF from Ekiti State recommended extending the audit period to December 2023, given that the process has yet to begin. Additionally, Lydia Jafiya, the Permanent Secretary of Finance, suggested focusing the audit on the period from 2021 to June 2022, when NNPC was transitioning from a corporation to a Limited Liability Company.

Finance Minister and Coordinating Minister of the Economy, Wale Edun, acknowledged the input from the members and expressed confidence that the audit would be conducted promptly.