“We Have Not Received Any Payment”: FG Probes N2.7tn Subsidy Claim by NNPC

“We Have Not Received Any Payment”: FG Probes N2.7tn Subsidy Claim by NNPC

  • FG is looking into the N2.7 trillion subsidy debt allegations made by the Nigerian National Petroleum Corporation
  • It is expected that the office of the federation's auditor general will carry out an audit procedure between 2015 and 2021
  • Mele Kyari, GCEO of NNPC, emphasised that NNPCL's cash flow had allowed them to pay for the fuel subsidy

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

There are hints that the federal government, through the federation's auditor general's office, is investigating the Nigerian National Petroleum Corporation's (NNPC) N2.7 trillion subsidy debt claims.

FG probes N2.7tn subsidy claim by NNPC
The office of the federation's auditor general is anticipated to conduct an audit process from 2015 to 2021. Photo Credit: FG
Source: UGC

This occured after the amount was lowered from N6 trillion to N2.7 trillion following an initial audit by independent audit firm KPMG.

Ali Mohammed, the director of house finance, acknowledged the procedure during the April 2024 Federal Account Allocation Committee meeting and promised an update on the matter will be presented at the May FAAC meeting.

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The office of the federation's auditor general is anticipated to conduct an audit from 2015 to 2021 to confirm the legitimacy of NNPC/Federation Account claims on the N2.7tn while also considering the possibility of engaging an outside audit company.

After fuel subsidy removal

A few hours after President Bola Tinubu declared the end of the subsidy system, Mele Kyari, the group chief executive officer of NNPCL, informed State House correspondents that the federal government still owed the company the sum of N2.8 trillion that was spent on fuel subsidies.

Kyari pointed out that NNPCL had covered the cost of the fuel subsidy through its cash flow and claimed that the government had not yet been able to return the N2.8 trillion.

Kyari said,

“Since the provision of the N6tn in 2022, and N3.7tn in 2023, we 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 based on 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.”

FG begins audit

BusinessDay obtained a copy of the FAAC meeting minutes, which indicated that the government had started 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.

Committee members claim that NNPCL has not complied with the Central Bank of Nigeria's modification of the currency rate for May 2023, which was N436.38/$1 at first, then N621.86/$1 and finally N693.50/$1.

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Due to NNPCL's denial, the vice chairman of the Post-Mortem Subcommittee issued a warning that FAAC will be forced to take appropriate action in order to collect the Federation monies if NNPC Ltd continues to disregard the usage of the agreed rate without providing any authority to that effect.

The official reported to the meeting that NNPCL had objected at the subcommittee meeting in April 2024 that the proposed review would cause the business to refund N16,829,747,742.96 to the Federation Account.

He said that although NNPCL used the exchange rate to pay for the subsidy claim, the subcommittee had anticipated that the Federation Account would receive a reimbursement for the full amount. He suggested that the FAAC make the decision in this case.

In contrast to the NNPCL's assertion of N1,675,920,811,819, the official noted that the subcommittee had reported on the implications of the "weighted average rate" on PMS computation and found that the exchange rate differential for the period of June to December 2023 was N937,961,442,969.83.

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Why fuel subsidy removal was necessary

Legit.ng reported that president Bola Ahmed Tinubu said fuel subsidy removal saved Nigeria from going bankrupt.

Tinubu said the decision of his administration to discontinue fuel subsidy payments was in the interest of the people.

He stated this while speaking at the Special World Economic Forum in Riyadh, Saudi Arabia on Sunday, April 28.

Source: Legit.ng

Zainab Iwayemi avatar

Zainab Iwayemi (Business Editor) Zainab Iwayemi is a business journalist with over 5 years experience reporting activities in the stock market, tech, insurance, banking, and oil and gas sectors. She holds a Bachelor of Science (B.sc) degree in Sociology from the University of Ilorin, Kwara State. Before Legit.ng, she worked as a financial analyst at Nairametrics where she was rewarded for outstanding performance. She can be reached via zainab.iwayemi@corp.legit.ng