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HomeTop NewsNigeria launches comprehensive audit of N2.7 trln fuel subsidy claims

Nigeria launches comprehensive audit of N2.7 trln fuel subsidy claims

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In a decisive move to ensure fiscal transparency, the Federal Government of Nigeria has initiated a thorough audit of the Nigerian National Petroleum Company Limited’s (NNPCL) N2.7 trillion fuel subsidy claims.

This audit, aimed at verifying the authenticity of the corporation’s subsidy-related financial transactions, follows an initial review by KPMG, which reduced the claims from N6 trillion to N2.7 trillion.

The audit, spearheaded by the Office of the Auditor General of the Federation, was confirmed by Ali Mohammed, Director of Home Finance, during the Federal Account Allocation Committee (FAAC) meeting in April 2024. An update on the audit’s progress is anticipated in the upcoming May FAAC meeting.

The comprehensive audit, covering the period from 2015 to 2021, seeks to scrutinize the legitimacy of NNPC’s claims against the Federation Account. This comes amid NNPCL’s assertion that the federal government owes it N2.8 trillion for petrol subsidy costs, a debt reportedly carried forward from its cash flow without reimbursement from the government.

Mele Kyari, NNPCL Group Chief Executive Officer, highlighted the company’s financial strain in a statement on May 30, 2023, coinciding with President Bola Tinubu’s announcement that the fuel subsidy was abolished.

Kyari disclosed that despite the budgetary provisions of N6 trillion in 2022 and N3.7 trillion in 2023, NNPCL had not received any payments from the Federation Account.

Minutes from the FAAC meeting reveal that the government is diligently pursuing the forensic audit. The report noted, “The process of the forensic audit of NNPC Limited as reported at the last meeting was in progress. An update will be provided on the matter at the next meeting.”

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The committee also expressed concerns over NNPCL’s non-compliance with the revised exchange rate of N693.50/$1 for converting federation revenue.

The Vice Chairman of the Post-Mortem Sub-committee cautioned that continued disregard for the agreed exchange rate could compel FAAC to take corrective measures to recover federation funds.

FAAC minutes detailed, “NNPCL was directed to comply with the revised exchange rate of N693.50/$1 and re-compute all royalties, taxes, and other revenue items for May 2023.” However, NNPCL indicated that adhering to this revised rate would necessitate a refund of N16.83 billion to the Federation Account.

Furthermore, the sub-committee reported discrepancies in NNPCL’s exchange rate differential claims for June to December 2023, identifying a disparity of over N700 billion between the company’s claims and the sub-committee’s calculations.

The sub-committee called for NNPCL to provide legal authorization for its weighted average exchange rate on PMS dollar payments.

The Oyo State Commissioner for Finance, Akinola Ojo, proposed that NNPCL should refund the disputed amount if a resolution is not achieved by the following month, emphasizing the need for accountability and transparency.

This audit underscores the federal government’s commitment to addressing financial discrepancies and ensuring the proper use of public funds, signaling a significant step towards fiscal responsibility in Nigeria’s oil and gas sector.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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