The current administration, under the leadership of Bola Tinubu, has taken proactive steps to thoroughly investigate the N2.7 trillion fuel subsidy claims put forth by the Nigerian National Petroleum Company Limited (NNPCL). This scrutiny follows an initial audit conducted by KPMG, which successfully reduced the claims from a staggering N6 trillion to the current amount. The government has authorized an ongoing audit, overseen by the Office of the Auditor General of the Federation, to verify the accuracy and legitimacy of the claims made by NNPCL.
During the April 2024 Federal Account Allocation Committee (FAAC) meeting, Ali Mohammed, the Director of Home Finance, affirmed the validation of the audit process. He also hinted at further updates expected in the upcoming May session. The audit is set to cover the period spanning from 2015 to 2021 to ensure that NNPCL’s claims are indeed valid and justifiable.
On May 30, 2023, Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed that the federal government owes the company a substantial N2.8 trillion for fuel subsidies. NNPCL had been shouldering this financial burden using its cash reserves due to the government’s failure to repay. This disclosure closely followed President Bola Tinubu’s acknowledgment that the current fuel subsidy system is unsustainable.
Minutes from the FAAC meeting highlighted progress in the audit process, with additional updates anticipated in the near future. Committee members expressed concerns over NNPCL’s refusal to comply with the revised exchange rate of N693.50/$1 set by the Central Bank of Nigeria (CBN) for converting federation revenue. The committee warned that if NNPCL continued to ignore the revised rate without proper authorization, necessary steps would be taken to recover the owed funds.
The adjustment in the exchange rate carries significant financial implications, with NNPCL now required to reimburse N16.83 billion to the Federation Account due to the rate modification. A sub-committee identified a significant discrepancy of approximately N938 billion for the period from June to December 2023, in contrast to NNPCL’s claim of N1.68 trillion. FAAC emphasized the importance of NNPCL providing authorization for the utilization of a weighted average exchange rate on PMS dollar payments. It was recommended that if an agreement could not be reached by the following month, NNPCL should refund the disputed amount promptly.
