Nigeria Begins Comprehensive Audit of N2.7tn Subsidy Debt

The Federal Government of Nigeria has launched an audit of the N2.7 trillion fuel subsidy claim made by the Nigerian National Petroleum Company Limited (NNPCL), as confirmed by The Punch. This audit follows an initial review by KPMG, which had already reduced the claims from N6 trillion to N2.7 trillion.

The government has now enlisted the Office of the Auditor General of the Federation to verify the claims. This decision was announced by Ali Mohammed, Director of Home Finance, during the Federal Account Allocation Committee (FAAC) meeting in April 2024. An update on this process is expected at the May FAAC meeting.

The audit, which spans from 2015 to 2021, aims to authenticate the NNPC/Federation Account claims on the N2.7 trillion debt. This comes after the NNPCL Group Chief Executive Officer, Mele Kyari, stated on May 30, 2023, that the federal government owes the firm N2.8 trillion for petrol subsidies. Despite NNPCL footing the subsidy bills from its cash flow, the government has yet to repay this amount.

A copy of the FAAC meeting minutes, sighted   by SK Blog confirmed the ongoing forensic audit of the N2.7 trillion claim. The minutes also revealed concerns over NNPCL’s non-compliance with the revised exchange rate of N693.50/$1 for converting federation revenue. The Vice Chairman of the Post-Mortem Sub-committee warned that continued disregard for the agreed rate could result in actions to recover Federation funds.

Additionally, NNPCL’s reluctance to adhere to the new exchange rates, as mandated by the Central Bank of Nigeria, has been a point of contention. The company argued that compliance would necessitate a refund of nearly N16.83 billion to the Federation Account, which they have instead used to offset subsidy claims.

The FAAC sub-committee has demanded that NNPCL provide legal authorization for using the weighted average exchange rate on PMS Dollar payments. The sub-committee also proposed that NNPCL be mandated to refund the contested amount if a resolution is not reached by next month.

The Oyo State Commissioner for Finance, Akinola Ojo, supported this stance, suggesting that NNPC Ltd. should refund the disputed funds to the Federation Account.