Politics

See What Federal Government Start to do, for N2.7tn Subsidy Debt

Published by admin on June 21st, 2024.

See What Federal Government Start to do, for N2.7tn Subsidy Debt

By Damilola Aina

President Bola Ahmed TinubuSee

The Federal Government has initiated an audit of the N2.7tn fuel subsidy claims made by the Nigerian National Petroleum Company Limited (NNPCL), according to The FIRST CLASS GISTS.

Initially, an audit conducted by KPMG had reduced the subsidy claims from N6tn to N2.7tn. In the new phase, the government has engaged the Office of the Auditor General of the Federation to further verify these claims.

Ali Mohammed, the Director of Home Finance, confirmed this development during the April 2024 Federal Account Allocation Committee (FAAC) meeting. He assured that an update would be provided in the May FAAC meeting.

The PUNCH reported last month that the audit, covering the years 2015 to 2021, aims to verify the legitimacy of NNPC/Federation Account claims. The government also considered hiring an external audit firm for this purpose.

On May 30, 2023, following President Bola Tinubu’s declaration that the “subsidy is gone,” NNPCL Group Chief Executive Officer Mele Kyari informed State House correspondents that the federal government still owed NNPCL N2.8tn for petrol subsidies. Kyari noted that NNPCL had been covering these costs from its own funds due to the government’s inability to repay.

The minutes from the FAAC meeting, obtained by our correspondent, reveal that the forensic audit of the N2.7tn subsidy claim is in progress. The Director of Home Finance stated that updates would be provided at the next meeting.

Committee members also criticized NNPCL for not adhering to the revised exchange rate of N693.50/$1, set by the Central Bank of Nigeria in May 2023, for converting federation revenue. The Vice Chairman of the Post-Mortem Sub-committee warned that FAAC might take action to recover federation funds if NNPCL continued to disregard the revised rate.

The minutes further detailed that NNPCL was directed to comply with the revised exchange rate and re-compute all relevant financial items for May 2023. NNPCL had previously indicated that the review would result in a substantial refund to the Federation Account, which it instead used to offset subsidy claims.

The sub-committee emphasized the need for NNPCL to provide legal authorization for using the weighted average exchange rate on PMS dollar payments. NNPCL responded by requesting an official letter to release the necessary approval. The sub-committee hopes for an amicable resolution with NNPCL regarding these financial matters.