Auditor-General’s Office Set to Verify N2.7 Trillion Fuel Subsidy Claim by NNPC

The Auditor-General’s office announces plans to scrutinize the NNPC’s N2.7 trillion fuel subsidy claim, aiming to ensure transparency and accountability in public spending.

The Office of the Auditor-General of the Federation (OAuGF) has obtained all required documentation to start verifying Nigerian National Petroleum Company Limited’s (NNPCL) ₦2.7 trillion fuel subsidy claim against the government.

This development comes after the Ministry of Finance’s procurement department acquired the terms of reference and scope of work for hiring an external firm to assist the OAuGF with verification.

In April 2024, the Federal Government initiated a new audit of NNPCL’s fuel subsidy claims. Previously, an audit by KPMG had substantially decreased these claims from ₦6 trillion to ₦2.7 trillion. The ongoing audit will focus on evaluating subsidy claims for the period between 2015 and 2021.

On May 30, 2023, following President Bola Tinubu’s emphatic announcement that the “subsidy is gone,” Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed that the government still had an outstanding debt of ₦2.8 trillion to the company for expenditures on petrol subsidies.

Kyari disclosed that NNPCL had been using its cash flow to cover the subsidy bills due to the government’s inability to pay back the outstanding amount.

He stated, “Despite the allocation of N6 trillion in 2022 and N3.7 trillion in 2023, we have not received any payment from the Federation.”

This implies that the Federal Government is unable to make payments, and we have been sustaining this subsidy using NNPC’s cash flow. We are awaiting payment of up to N2.8 trillion by the government from NNPC’s funds due to the subsidy program, and it’s unsustainable for us to keep shouldering this burden.

In the update provided in the minutes of the Federal Allocation Accounts Committee meeting for September 2024, Ali Mohammed, the Director of Home Finance, stated that the exercise would be conducted with careful consideration.

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A portion of the minutes titled “Update on the Forensic Audit Covering 2015 to 2022 to Verify NNPC/Federation Claims Regarding N2.7tn Withheld by NNPC Limited” indicated that documents had been supplied for conducting this task.

The minutes stated, “The Director of Home Finance reported that the documents requested by the Office of the Auditor-General for the Federation were provided to facilitate their assignment.”

He further stated that the Ministry’s Procurement Department had received both the Terms of Reference and Scope of Work to assist in hiring an external firm, which would aid OAuGF in carrying out the assignment.

The Chairman mentioned that he had discussed the issue with the Auditor-General for the Federation, who committed to thoroughly carrying out the task in collaboration with an External Audit Firm as suggested. He promised that the Ministry would keep coordinating with OAuGF to ensure successful completion of this assignment.

The director also requested that the topic be removed from discussions until further notice.

“According to him, he recommended—and the meeting concurred—that the issue be temporarily removed from Matters Arising until any future updates are available,” he stated.

Experts following the situation had raised concerns about the investigation after former NNPCL CFO Ajiya Umar’s departure. However, NNPCL spokesperson Femi Soneye dismissed these worries, emphasizing that the process is still underway.

In a conversation with our correspondent on Monday, Soneye stated, “I can confirm that reconciliation is underway with the appropriate government agencies and auditors. Once this process is finalized, we will inform the public accordingly.”