The Federal Government has finally moved forward with plans to engage an external auditor to scrutinise the N2.7 trillion fuel subsidy claim made by the Nigerian National Petroleum Company Limited (NNPC) against the government.
This external auditor, whose identity has yet to be disclosed, will support the Office of the Auditor-General of the Federation in ascertaining the actual amount owed by the government. The audit will cover the period from 2015 to 2021.
This development comes five months after the proposal was first discussed during the Federation Allocation Accounts Committee (FAAC) meeting in April 2024. Initially, NNPC claimed an outstanding subsidy of N6 trillion, but after an initial audit conducted by KPMG, the figure was reduced to N2.7 trillion.
Despite regular updates from the Director of Home Finance at the Ministry of Finance, Ali Mohammed, at FAAC meetings, the move to appoint an external auditor suggests that no significant progress had been made in auditing the claim until now.
On May 30, 2023, just hours after President Bola Tinubu’s declaration that “subsidy is gone,” NNPC’s Group Chief Executive Officer, Mele Kyari, informed State House correspondents that the Federal Government still owed the company N2.8 trillion in petrol subsidy payments.
Kyari explained that NNPC had been covering the cost of petrol subsidies from its own cash flow, as the government had been unable to reimburse the N2.8 trillion. He stated, “Since the provision of N6 trillion in 2022 and N3.7 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 NNPC. We are waiting for them to settle up to N2.8 trillion of NNPC’s cash flow from the subsidy regime, and we can’t continue to build this.”
According to minutes from a recent FAAC meeting, the procurement department of the finance ministry has now initiated the process of selecting an external auditor. The minutes noted, “On the forensic audit covering the period 2015 to 2021 to Authenticate NNPC/Federation Claims in Respect of N2.7tn 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.”
The Chairman of the Commissioners’ Forum/HCF, Ekiti State, suggested extending the audit period to December 2023, given that the exercise has yet to commence. Meanwhile, the Permanent Secretary of Finance, Lydia Jafiya, recommended narrowing the audit’s scope to cover the period from 2021 to June 2022, when NNPC transitioned from a corporation to a Limited Liability Company.
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In conclusion, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, acknowledged the contributions from FAAC members and expressed optimism that the audit would be conducted swiftly.
