• Thursday, July 18, 2024
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BusinessDay

FG begins probe on N2.7trn fuel subsidy debt claims by NNPC

Asiwaju Bola-Tinubu

There are indications that the federal government has started to probe the N2.7 trillion subsidy debt claims by the Nigerian National Petroleum Corporation (NNPC) through the office of the auditor general of the federation.

This comes after an independent audit firm, KPMG had conducted an initial audit and subsequently reduced the amount from N6 trillion to N2.7 trillion.

During the April 2024 Federal Account Allocation Committee meeting, Ali Mohammed, director of home finance confirmed the process and said an update on the issue would be made known at the May FAAC meeting.

The audit process which would be carried out by the office of the auditor general of the federation is expected to span from 2015 to 2021 to verify the authenticity of NNPC/Federation Account claims on the N2.7tn while it considered hiring an external audit firm.

Mele Kyari, the group chief executive officer of NNPCL told State House correspondents a few hours after President Bola Tinubu declared the end of the subsidy regime that the federal government still owes the corporation the sum of N2.8tn spent on petrol subsidy.

Kyari noted that NNPCL had footed the petrol subsidy bills through its cash flow claiming the government had so far been unable to pay back the N2.8tn.

“Since the provision of the N6tn in 2022, and N3.7tn in 2023, we have not received any payment whatsoever from the Federation,” Kyari said.

“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,” he added.

However, a copy of the minutes of the FAAC meeting sighted by our correspondent revealed that the government had begun the audit of the subsidy claim.

“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, Home Finance informed members that the process of the forensic audit of NNPC Limited as reported at the last meeting was in progress. He assured that an update would be provided on the matter at the next meeting,” the minute read in part.

According to members of the committee, NNPCL has refused to comply with the Central Bank of Nigeria’s revision of the May 2023 exchange rate from N436.38/$1 to N621.86/$1 and subsequently N693.50/$1.

Due to NNPCL’s refusal, the vice chairman, of the Post-Mortem Sub-committee,  warned that “If NNPC Ltd continues to disregard the use of the agreed rate without presenting any authority to that effect, FAAC will be left with no option but to take appropriate action to recover the Federation funds.”

The official informed the meeting that at the April 2024 meeting of the sub-committee, NNPCL complained that the proposed review would result in a refund of N16,829,747,742.96 to the Federation Account by the company.

He concluded that the sub-committee expected that the Federation Account be refunded the amount of the exchange rate but NNPCL used it to defray the subsidy claim. He recommended that FAAC should decide on the matter.

The official recalled that the sub-committee had reported the implication of the “weighted average rate” on PMS computation and discovered that the exchange rate differential for the period of June to December 2023 was N937,961,442,969.83, contrary to the NNPCL claim of N1,675,920,811,819.

In his suggestion, he noted that NNPC Ltd should be called to order and hoped that the matter could be resolved amicably with the oil firm.