External auditors to examine NNPC N2.6tn subsidy claim

cover, Financial Markets

The Federal Government has finally initiated plans to enlist the services of an external auditor to verify the N2.7tn fuel subsidy claim by the Nigerian National Petroleum Company Limited against the government,

The yet-to-be-named auditor will assist the Office of the Auditor-General of the Federation in determining the real amount owed by the government.

This development comes five months after the plan was proposed at the monthly Federation Allocation Accounts Committee meeting in April 2024.

NNPC claimed an outstanding of N6tn but was reduced to N2.7tn after an initial audit by an audit firm, KPMG.

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Although the Director of Home Finance at the Ministry of Finance, Ali Mohammed, has always provided updates at every FAAC meeting, the latest development for an external auditor indicates that no concrete step has been taken to audit the claim.

On May 30, 2023, a few hours after the “subsidy is gone” declaration by President Bola Tinubu, the NNPC Group Chief Executive Officer, Mele Kyari, told State House correspondents that the Federal Government still owed the firm the sum of N2.8tn spent on petrol subsidy.

While saying the NNPC footed petrol subsidy bills from its cash flow, Kyari said the government had so far been unable to pay back the N2.8tn.

He said, “Since the provision of the N6tn in 2022 and N3.7tn 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 N2.8tn 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 our correspondent 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 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.”

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.