The Office of the Auditor-General of the Federation (OAuGF) has now received all necessary documents to verify the Nigerian National Petroleum Company Limited’s (NNPCL) N2.7 trillion fuel subsidy claim against the Nigerian government.
This follows the procurement department of the Ministry of Finance obtaining the terms of reference and scope of work to guide the process of engaging an external firm that will assist the OAuGF with the audit.
In April 2024, the Federal Government initiated a fresh audit of the N2.8 trillion fuel subsidy claim made by NNPCL. The initial audit, conducted by KPMG, had already reduced the original claims from N6 trillion to N2.7 trillion.
The audit, which covers the period from 2015 to 2021, has become a critical point of focus as the government continues to address the financial challenges related to the subsidy regime.
In a statement on 30th May 2023, shortly after President Bola Tinubu declared that the subsidy regime had ended, Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed that the Federal Government still owed the company N2.8 trillion for its petrol subsidy expenses. Kyari noted that the NNPCL had been covering the subsidy payments from its own cash flow, but the government had yet to reimburse the company for the sum.
Kyari emphasised, “Since the provision of the 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 the 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.”
In September 2024, during a meeting of the Federal Allocation Accounts Committee (FAAC), Ali Mohammed, the Director of Home Finance, assured that the ongoing audit would be conducted thoroughly. Minutes from the meeting confirmed that the OAuGF had received the necessary documents to proceed with the audit.
Additionally, the procurement department had received the Terms of Reference and Scope of Work to guide the engagement of the external audit firm.
A section of the meeting minutes stated, “The Director, Home Finance, reported that the Office of the Auditor-General for the Federation was provided with the documents requested for conducting the assignment. He also reported that the Procurement Department of the Ministry had been given the Terms of Reference and the Scope of Work to guide the process of hiring the external firm that would support OAuGF in conducting the assignment.”
Furthermore, experts have expressed concerns about the effectiveness of the audit, especially following the departure of NNPCL’s former Chief Financial Officer, Ajiya Umar. However, NNPCL spokesperson Femi Soneye reassured that the process is continuing smoothly.
Soneye said that reconciliation is currently underway with the relevant government agencies and auditors.
“Once the process is completed, the public will be informed appropriately,” he added.
Meanwhile, revenue-generating agencies have made significant contributions to the Federation Account. Between January and July 2024, agencies reconciled a total sum of N1.19 trillion in arrears, following discussions to resolve unresolved revenue disbursements.
According to FAAC meeting minutes, the total amount reconciled for July 2024 was $214.32 million (N289.01 billion).
However, there remain outstanding amounts due to the Federation Account. As of September 2024, unresolved arrears stood at $273.7 million (N3.65 trillion), with NNPCL, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Federal Inland Revenue Service (FIRS) among the agencies involved in the reconciliation.
Energy expert Professor Wumi Iledare questioned why such a large sum remained unresolved and suggested that the audit should also address the funds collected by NNPCL on behalf of the government.
Similarly, Professor Dayo Ayoade, an energy expert at the University of Lagos, raised concerns about the lack of transparency in the relationship between the government and NNPCL, describing it as historically shrouded in secrecy. He called for greater scrutiny of the financial dealings to ensure accountability.
The investigation into the N2.7 trillion subsidy refund claim remains a crucial element in the ongoing efforts to bring clarity to Nigeria’s energy sector finances.
