FG Auditors Investigate NNPCL’s N2.7tn Subsidy Refund Claim

FG Auditors Investigate NNPCL’s N2.7tn Subsidy Refund Claim

By Fly Cable News

The Office of the Auditor-General of the Federation has received the necessary documents to verify the Nigerian National Petroleum Company Limited’s (NNPCL) claim of a N2.7 trillion fuel subsidy refund from the government, according to reports.

Meanwhile, the procurement department of the Ministry of Finance has received the terms of reference and the scope of work to guide the process of hiring an external firm to assist the Auditor-General’s Office in the audit.

The Federal Government initiated a new audit in April 2024 to examine the NNPCL’s N2.8 trillion fuel subsidy claim. An earlier audit by KPMG had reduced the claim from N6 trillion to N2.7 trillion.

The audit will cover the period from 2015 to 2021.

On May 30, 2023, just after President Bola Tinubu declared the end of the fuel subsidy, Mele Kyari, the Group CEO of NNPCL, informed the press that the government still owed NNPCL N2.8 trillion for fuel subsidies. Kyari explained that although NNPCL had been funding the subsidy from its cash flow, the government had not reimbursed the company.

Kyari stated, “Since the provision of the N6 trillion in 2022 and N3.7 trillion in 2023, we have not received any payment from the Federation. The Federal Government is unable to pay, so we continue to support the subsidy from NNPC’s funds.”

An update provided during the Federal Allocation Accounts Committee (FAAC) meeting in September 2024 confirmed that the necessary documents had been provided to conduct the audit.

The meeting minutes read, “The Director, Home Finance reported that the Office of the Auditor-General for the Federation had received the requested documents to conduct the audit.” Additionally, the Procurement Department has outlined the Terms of Reference and Scope of Work to guide the hiring of an external audit firm to assist.

The director further proposed temporarily removing the matter from the meeting agenda until a future update.

Experts have expressed concerns about the probe following the departure of former NNPCL CFO Ajiya Umar, but NNPCL spokesperson Femi Soneye assured that the reconciliation process is ongoing. He stated, “Reconciliation is currently ongoing with the relevant government agencies and auditors. Once completed, the public will be appropriately informed.”

In other news, revenue-generating agencies have refunded a total of N1.19 trillion in arrears to the Federation Account between January and July 2024, following reconciliations of unresolved revenue disbursements.

The FAAC’s meeting minutes indicated that $214.32 million (N289.01 billion) was repaid in July 2024, with further reconciliation of outstanding amounts due from agencies such as NNPCL, the Nigerian Upstream Petroleum Regulatory Commission, and the Federal Inland Revenue Service.

Energy expert Prof. Wumi Iledare questioned why NNPCL allowed such a large amount to remain unpaid by the government, while Prof. Dayo Ayoade of the University of Lagos emphasized that the relationship between the government and NNPCL has often lacked transparency, complicating efforts to assess accountability.