LAGOS, Nigeria (VOICE OF NAIJA)-The Nigerian National Petroleum Company Limited‘s N2.7 trillion fuel subsidy claim is currently under audit by the Federal Government.
Previously, audit firm KPMG had conducted an initial review that reduced the claims from N6 trillion to N2.7 trillion.
However, in the latest audit process, the government has authorized the Office of the Auditor General of the Federation to verify the Nigerian National Petroleum Corporation’s claims regarding the owed amount.
This process was affirmed by the Director, Home Finance, Ali Mohammed, during the April 2024 Federal Account Allocation Committee meeting.
The government indicated that a progress report on the matter would be presented at the May FAAC meeting.
On May 30, 2023, shortly after President Bola Tinubu’s declaration of the end of subsidies, the Group Chief Executive Officer of NNPC Limited, Mele Kyari informed State House correspondents that the federal government still owes the company N2.8 trillion in petrol subsidy expenses.
Kyari emphasized that NNPC had covered these costs from its own cash flow, noting that the government had yet to reimburse the N2.8 trillion.
He said “Since the provision of the N6tn in 2022, and N3.7tn in 2023, we have not have not received any payment whatsoever from the Federation.
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“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.”
However, according to a copy of the FAAC meeting minutes obtained by our correspondent, the government had indeed commenced the audit of the N2.6 trillion subsidy claim.
The minute read in part, “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.”
Committee members expressed frustration over NNPC Limited’s non-compliance with the updated exchange rate of N693.50 per US dollar for converting federation revenue.
They noted that NNPC has disregarded the Central Bank of Nigeria’s revision from N436.38/$1 to N621.86/$1 in May 2023, and subsequently to N693.50/$1, as instructed.
Regarding NNPC Ltd’s refusal to comply with the revised exchange rate of N693.50/$1 for converting Federation revenue, the Vice Chairman of the Post-Mortem Sub-committee cautioned 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 minute further read, “At the last meeting of FAAC, it was reported that there was a review of the May 2023 CBN Exchange rate from N436.38/$1 to N621.86/$1 and a further review to N693.50/$1 in line with the directive of CBN. NNPCL was directed to comply with the revised exchange rate of N693.50/$1 and re-compute all the Royalties, Taxes and other revenue items for May 2023 and revert.”
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The official reported to the meeting that during the April 2024 sub-committee session, NNPC Ltd. expressed concern that the proposed review could lead to a refund of N16,829,747,742.96 to the Federation Account.
He concluded that the sub-committee anticipated the Federation Account would receive the refunded amount from the exchange rate adjustment, which NNPC Ltd. instead utilized to offset the subsidy claim.
He suggested that FAAC should make a decision on the issue.
He pointed out that the sub-committee had previously discussed the implications of using the “weighted average rate” in calculating PMS costs.
It was revealed that the actual exchange rate differential for the period spanning June to December 2023 amounted to N937,961,442,969.83, which was significantly lower than NNPC Ltd.’s reported claim of N1,675,920,811,819.
He emphasized that the Sub-committee acknowledged only the exchange rate authorized by law and required NNPC Ltd to provide authorization for the use of the weighted average exchange rate in PMS dollar payments.
He revealed that in response, NNPC Ltd. requested the Sub-committee to formally write to the company to facilitate the release of the NEC approval on the matter.
He recommended that NNPC Ltd. be cautioned and expressed optimism for an amicable resolution with the company.
The Oyo State Commissioner for Finance, Akinola Ojo, additionally suggested that NNPC Ltd. should be compelled to refund the money if a resolution on the issue is not reached by next month.