The Bola Tinubu-led government has launched a comprehensive audit of the Nigerian National Petroleum Company Limited’s (NNPCL) N2.7 trillion fuel subsidy claims.
This follows an initial audit by KPMG, which reduced the claims from N6 trillion to N2.7 trillion.
The current audit, approved by the government, is being conducted by the Office of the Auditor General of the Federation to verify the accuracy of the claims made by NNPCL.
Ali Mohammed, Director of Home Finance, confirmed the audit process during the April 2024 Federal Account Allocation Committee (FAAC) meeting, with updates expected in the upcoming May meeting.
He said the audit will cover the period from 2015 to 2021 to ensure the legitimacy of NNPCL’s claims.
On May 30, 2023, NNPCL’s Group Chief Executive Officer, Mele Kyari, revealed that the federal government owes the company N2.8 trillion for fuel subsidies, which NNPCL had been covering from its cash flow due to the government’s inability to repay.
The statement came shortly after President Bola Tinubu’s declaration that the fuel subsidy is no longer sustainable.
FAAC meeting minutes indicate progress in the audit, with further updates anticipated.
Committee members had expressed concerns over NNPCL’s refusal to comply with the revised exchange rate of N693.50/$1, as directed by the Central Bank of Nigeria (CBN), for converting federation revenue.
The committee warned that if NNPCL continues to ignore the revised rate without proper authorization, it will take necessary actions to recover the funds owed to the Federation Account.
The revised exchange rate has significant financial implications, with NNPCL needing to refund N16.83 billion to the Federation Account due to the rate change.
The sub-committee reported a discrepancy of approximately N938 billion for the period from June to December 2023, compared to NNPCL’s claim of N1.68 trillion.
FAAC emphasized the need for NNPCL to provide authorization for using a weighted average exchange rate on PMS dollar payments and proposed that if a resolution is not reached by next month, NNPCL should refund the disputed amount.
