FG intends to re-audit N2.7 trillion in subsidy debt.
The N2.8 trillion gasoline subsidy claim of Nigerian National Petroleum Company Limited will be the focus of a fresh Federal Government audit.
A first audit by KPMG, an auditing firm, had brought the claims down from N6tn to N2.7tn.
The federal government is also thinking about hiring an outside audit firm or giving the Office of the Auditor General of the Federation instructions to confirm the corporation’s assertions about how much the government owes the oil company.
The latest plan was made public in the March 2024 minutes of the Federal Account Allocation Committee meeting.
Few hours after President Bola Tinubu declared that the “subsidy is gone” on May 30, 2023, NNPCL Group Chief Executive Officer Mele Kyari informed State House reporters that the federal government still owed the company the N2.8 trillion it had spent on petrol subsidies.
Although Kyari stated the NNPCL paid for petrol subsidies out of its cash flow, the government had not yet been able to return the N2.8 trillion.
“We have not received any payment whatsoever from the Federation since the provision of the N6tn in 2022 and the N3.7tn in 2023,” he said.
“That implies they (the Federal Government) are unable to pay, and we have kept funding this subsidy through the cash flow of the NNPC.” We are unable to proceed building this till they settle up to N2.8 trillion of NNPC’s cash flow from the subsidy regime.”
Tinubu was pledged to carry out the forensic audit of NNPC Limited and analyse the findings, according to an update on the matter given by Wale Edun, the Minister of Finance and committee chairman, during the FAAC meeting.
claim of NNPC
NNPC/Federation Account claims on the N2.7 trillion will be authenticated, he said, and the audit would run from 2015 to 2021.
Considering their experience in auditing, Edun further suggested that the OAuGF be given preference for the new audit over any other outside audit.
Part of the minutes said, “The Chairman informed the members of Mr. President’s commitment to conducting the forensic audit of NNPC Limited.” He did suggest, nevertheless, that the Office of the Auditor-General of the Federation be given priority over any other outside audit firm because it possessed auditing experience. If help from outside was required, he advised using an independent company.
But Ogun State Commissioner for Finance Dapo Okubadejo turned down the proposal, saying that using an outside auditor would lessen any possible conflicts of interest during the process.
Further commissioners who added their viewpoints to the conversation were Isaac Kamalu of Rivers State and Lawal A. Maikano of Niger State.
In the end, agreement was achieved to give the OAuGF priority, provided that an outside audit company be called upon if more assistance was felt to be required.
“The HCF, Ogun State, observed that it would be better to engage an independent auditor to conduct the exercise so that other tiers of government will benefit from that level of independence,” the minute later read in part. The viewpoint was endorsed by the HCF, Niger State, which also underlined the need of executing the process with impartiality and inclusion. The HCF in Rivers State, for its part, pointed out that hiring an outside auditor would not ensure the success of the operation. For the exercise to be successful, he consequently recommended combining OAuGF with outside companies.
Federation account
According to the Federal Commissioner for Revenue Mobilisation, Allocation and the Chairman of the Fiscal Commission for Indices and Disbursement, the proposed audit was for certain unpaid claims, such the N6tn claim against NNPC Limited that was later reduced to N2.7tn following the first reconciliation. He told the members that some of the accusations had been examined and that additional audits were suggested to address them by KPMG, which conducted the previous audit exercise for NNPC.
A decision to give OAuGF top priority and to call in an outside audit firm for more help was reached at the end of the meeting.
By Wednesday afternoon, attempts to get remarks from Olufemi Soneye, the Chief Corporate Communications Officer of NNPC Ltd., had failed. Neither did he answer his WhatsApp messages or take calls on his phone.
At the conference, Delta State Commissioner of Finance Okenmor Tilije voiced worries about the purported usage of several currency rates by Federal Government agencies in the conversion of income input.
He claims that the procedure impacts the money sent into the Federation Account.
The commissioner said that between August 2023 and February 2024, there was an exchange rate discrepancy of nearly N2.83 trillion because NNPC Limited converted the income receipts from oil at three separate prices.
He outlined the several rates, which include the N1,185 CBN mandated exchange rate, the N853 rate applied to domestic oil payables, and the weighted average rate of N714.50 on NNPC Limited royalty and taxes.
“The HCF, Delta State, expressed concerns about the agencies applying multiple exchange rates to convert the revenue inflow from the Federation.” read the minute. He brought out that NNPC Limited converted its oil income profits at three distinct rates. The need of implementing a single exchange rate that would be applicable everywhere was emphasised by him, who noted that the exchange rate differentials from August 2023 to February 2024 were N2.83 trillion.