By Ayomide Otitoju
The Federal Government has initiated plans to engage an external auditor to verify the N2.7 trillion fuel subsidy claim made by the Nigerian National Petroleum Company Limited (NNPC)
The unnamed auditor will collaborate with the Office of the Auditor-General of the Federation to determine the actual amount owed by the government to NNPC.
This move comes five months after the proposal was first discussed at the monthly Federation Allocation Accounts Committee (FAAC) meeting in April 2024.
Initially, NNPC had claimed an outstanding subsidy of N6 trillion, but this was reduced to N2.7 trillion after an audit conducted by the firm KPMG.
The PUNCH had previously reported that the audit would cover the period from 2015 to 2021. Despite regular updates provided by the Director of Home Finance at the Ministry of Finance, Ali Mohammed, during FAAC meetings, the decision to hire an external auditor indicates that substantial progress on the audit has yet to be made.
On May 30, 2023, shortly after President Bola Tinubu’s declaration that “subsidy is gone,” NNPC Group Chief Executive Officer, Mele Kyari, informed State House correspondents that the Federal Government still owed the company N2.8 trillion for petrol subsidy payments. Kyari explained that NNPC had been covering these subsidy costs from its cash flow, and the government had not yet reimbursed the company.
“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 the Federal Government is unable to pay, and we’ve continued to support this subsidy from NNPC’s cash flow. We are waiting for them to settle up to N2.8 trillion,” Kyari said.
A copy of the minutes from the recent FAAC meeting, revealed that the finance ministry’s procurement department has started the selection process for an external auditor.
The minutes stated, “On the forensic audit covering the period 2015 to 2021 to authenticate NNPC/Federation claims in respect of N2.7 trillion 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. 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.”
During the meeting, the Chairman of the Commissioners’ Forum/HCF from Ekiti State recommended extending the audit review period to December 2023, given that the exercise had yet to begin. Additionally, the Permanent Secretary of Finance, Lydia Jafiya, suggested limiting the scope of the audit to cover the period from 2021 to June 2022, when NNPC transitioned from a corporation to a Limited Liability Company.
In conclusion, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, expressed appreciation for the members’ contributions to the discussion and conveyed optimism that the audit exercise would be conducted promptly.
