Governors Raise Concerns Over NNPCL’s Unapproved N1tn Subsidy Expenditure

Governors Raise Concerns Over NNPCL’s Unapproved N1tn Subsidy ExpenditureThe Nigerian National Petroleum Company Limited (NNPCL) has requested an additional N1.19 trillion subsidy refund for July 2024, citing exchange rate differences on Premium Motor Spirit (PMS) imports and joint venture taxes. This request has sparked criticism from state governments, who have raised concerns over NNPCL’s accounting practices.....KINDLY READ THE FULL STORY HERE▶

The request and its associated details were uncovered in the September 2024 report from the Federation Account Allocation Committee (FAAC) Postmortem Sub-Committee, which was obtained by The PUNCH on Monday. According to the report, exchange rate differentials stood at N4.56 trillion as of June 2024 due to under-recovery on petrol imports between August 2023 and June 2024. By July 2024, this figure had risen to N5.31 trillion.

NNPCL attributed the increase to fluctuations in foreign exchange rates and unresolved subsidy payments from prior months. The growing sum of subsidy payments continues to raise alarms about the fiscal impact on the Federation Account.

Accounting Concerns and Discrepancies

The FAAC Sub-Committee expressed concerns over discrepancies in NNPCL’s reports, particularly regarding the N1.19 trillion figure, which was included as a balance carried forward in NNPCL’s ledger. This amount had not been included in previous FAAC reports, making it unrecognized in earlier deliberations. The Sub-Committee highlighted that NNPCL’s request for applying the Weighted Average Rate (WAR) covered the period from August 2023 to June 2024, but the N1.19 trillion brought forward was not part of the prior reports.

The FAAC report noted, “As of June 2024, the Exchange Rate Differentials stood at N4.56 trillion, which increased to N5.31 trillion in July 2024. However, NNPCL’s report included an additional N1.19 trillion, which was not previously accounted for in earlier reports.”

The NNPCL clarified that this N1.19 trillion represented an actual under-recovery amount that covered June and July 2024, which it used as the opening balance in its reports. The Sub-Committee has since recommended that NNPCL resubmit the figures for further review.

Missing Documentation and Lack of Transparency

Further scrutiny of NNPCL’s claims revealed additional concerns. A previous FAAC meeting showed an outstanding claim of N4.34 trillion against the Federation, tied to exchange rate differentials. However, the NNPCL’s report lacked key documentation, including the volume of PMS imported, pricing, and sales details to justify the exchange rate differentials.

The Federal Commissioner of the Revenue Mobilisation, Allocation, and Fiscal Commission (RMAFC) pointed out that the missing details made it difficult for the Sub-Committee to justify the claims, urging NNPCL to provide the relevant information for further review.

The FAAC Sub-Committee stressed the importance of transparency in subsidy-related reporting. It noted that discrepancies in NNPCL’s submissions had delayed the reconciliation process, which had already been referred to the Presidential Alignment Committee for review.

Subsidy Payments and Government Support

The issue of subsidy payments continues to be a major burden on government finances. While President Bola Tinubu announced the removal of fuel subsidies during his inauguration in May 2023, there have been growing concerns that subsidies were quietly reintroduced.

A proposed economic stabilization plan indicated that the government had planned to spend about N5.4 trillion on fuel subsidies for the year. NNPCL’s request for N5.31 trillion to cover petrol under-recovery is nearly identical to the government’s proposed subsidy budget, raising questions about the actual elimination of subsidies.

The government had already spent around N3.6 trillion on fuel subsidies between January and June 2023, surpassing the total N2 trillion spent in 2022. Despite claims of subsidy removal, petrol prices have risen sharply. From N175 per litre in May 2023, the price surged to N1,060 per litre by October 2024, imposing significant financial hardship on Nigerians.

The continued high costs of fuel, combined with the lack of transparency and accountability in subsidy reporting, have led to growing frustration among Nigerians who had hoped for relief under President Tinubu’s administration.

For more information on this article and other related posts from Bushradiogist, please join our WhatsApp channel by clicking this link https://whatsapp.com/channel/0029VaUumOODTkK7AZL1Fw3o. For advertisement inquiries only, kindly send a message to 090 1907 0863 on WhatsApp.