NNPC’s ₦2.6 Trillion Fuel Subsidy Claim Faces External Audit Examination

NNPC’s ₦2.6 Trillion Fuel Subsidy Claim Faces External Audit Examination....KINDLY READ THE FULL STORY HERE▶

The Federal Government has initiated steps to hire an external auditor to verify the Nigerian National Petroleum Company Limited’s (NNPC) ₦2.7 trillion fuel subsidy claim. This decision comes five months after the idea was first proposed during the Federation Allocation Accounts Committee (FAAC) meeting in April 2024……CONTINUE READING 

The identity of the external auditor remains undisclosed, but they will collaborate with the Office of the Auditor-General of the Federation to ascertain the exact amount owed to NNPC by the government. The audit will cover the period from 2015 to 2021, a time when fuel subsidy payments have been a controversial aspect of Nigeria’s fiscal management.

NNPC initially claimed an outstanding subsidy bill of ₦6 trillion. However, an audit by KPMG later reduced this figure to ₦2.7 trillion. Despite regular updates provided by Ali Mohammed, Director of Home Finance at the Ministry of Finance, during FAAC meetings, this latest move represents the government’s firm step toward closely examining the fuel subsidy claims. This development comes after President Bola Tinubu’s declaration on May 30, 2023, that “subsidy is gone.”

Following this announcement, NNPC’s Group Chief Executive Officer, Mele Kyari, disclosed that the Federal Government owed the company ₦2.8 trillion for petrol subsidy payments, which NNPC had been covering through its own cash flow. Kyari stated, “Since the provision of the ₦6 trillion in 2022 and ₦3.7 trillion in 2023, we have not received any payment from the Federation. That means they (the Federal Government) are unable to pay, and we’ve continued to support this subsidy from the cash flow of the NNPC. We are waiting for them to settle up to ₦2.8 trillion of NNPC’s cash flow from the subsidy regime, and we can’t continue to build this.”

Minutes from the recent FAAC meeting, obtained by Punch on Tuesday in Abuja, revealed that the procurement department of the Ministry of Finance has begun the process of selecting an external auditor. The minutes stated, “On the forensic audit covering the period 2015 to 2021 to authenticate NNPC/Federation claims in respect of ₦2.7 trillion 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 addition, the Chairman of the Commissioners’ Forum/HCF from Ekiti State suggested extending the audit review period to December 2023, given that the exercise has yet to begin. Meanwhile, the Permanent Secretary of Finance, Lydia Jafiya, recommended limiting the audit’s scope to cover the period from 2021 to June 2022, when NNPC transitioned from a corporation to a Limited Liability Company.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, expressed gratitude for the members’ contributions to the issue and shared his optimism that the audit would be completed promptly.