The Federal Government has commenced efforts to enlist the services of an external auditor to verify the Nigerian National Petroleum Company Limited’s (NNPC) ₦2.7 trillion fuel subsidy claim.
This move comes five months after the proposal was first raised at the Federation Allocation Accounts Committee (FAAC) meeting in April 2024.
The external auditor, whose identity remains undisclosed, will work with the Office of the Auditor-General of the Federation to determine the exact amount owed to NNPC by the government.
The audit will cover a period from 2015 to 2021, a time frame during which fuel subsidy payments have been a contentious issue in Nigeria’s fiscal management.
Initially, NNPC claimed an outstanding subsidy bill of ₦6 trillion. However, an audit by KPMG had reduced this figure to ₦2.7 trillion.
Despite updates provided by the Director of Home Finance at the Ministry of Finance, Ali Mohammed, at each FAAC meeting, this recent move signifies the government’s concrete step to scrutinize the fuel subsidy claims.
This development follows the “subsidy is gone” declaration by President Bola Tinubu on May 30, 2023.
Shortly after the declaration, NNPC’s Group Chief Executive Officer, Mele Kyari, revealed that the Federal Government owed the firm ₦2.8 trillion for petrol subsidy payments, which NNPC had been financing from its cash flow.
He said, “Since the provision of the ₦6tn in 2022 and ₦3.7tn 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 the NNPC. We are waiting for them to settle up to ₦2.8tn of NNPC’s cash flow from the subsidy regime and we can’t continue to build this.”
A copy of the minutes of the recent FAAC meeting obtained by Punch on Tuesday in Abuja revealed that a selection process for an external auditor by the procurement department of the finance ministry has begun.
The minute read, “On the forensic audit covering the period 2015 to 2021 to Authenticate NNPC/Federation Claims in Respect of ₦2.7tn 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.”
Commenting on the issue, the Chairman of Commissioners’ Forum/HCF, Ekiti State, suggested the need to extend the period of the audit review to December 2023, considering that the exercise was yet to commence.
Also, the Permanent Secretary of Finance, Lydia Jafiya, suggested the need to limit the scope of the audit exercise to cover the period 2021 to June 2022, when NNPC was a corporation before transitioning to a Limited Liability Company.
Concluding, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, appreciated the contributions of members on the issue and expressed optimism that the exercise would be speedily executed.
