A recent forensic audit conducted by KPMG has revealed that the Nigerian National Petroleum Company Limited (NNPCL) inflated its fuel subsidy claims by N3.3 trillion, prompting the Tinubu administration to launch an investigation into the company’s activities during the Buhari era.
The audit, commissioned by the federal government, found that NNPCL’s actual fuel subsidy claims were significantly lower than reported. NNPCL had initially claimed it spent N6 trillion on subsidies, with a substantial portion paid by the government under former President Muhammadu Buhari.
Despite these payments, NNPCL’s Group CEO, Mele Kyari, recently stated that the federal government still owes the company N2.8 trillion for petrol subsidies.
“Since the provision of the N6 trillion in 2022, and N3.7 trillion in 2023, we have not received any payment whatsoever from the Federation. We are waiting for them to settle up to N2.8 trillion of NNPC’s cash flow from the subsidy regime, and we can’t continue to build this.” Kyari said, highlighting the company’s financial strain.
In response to these discrepancies, the Nigerian government has decided to conduct a new audit of the N2.8 trillion subsidy claim. This audit will cover the period from 2015 to 2021 and will be led by the Office of the Auditor-General for the Federation (OAuGF). The federal government may also engage an external auditing firm to ensure thoroughness and impartiality.
The decision for a fresh audit was made during a Federal Account Allocation Committee (FAAC) meeting in March 2024. Finance Minister Wale Edun underscored President Tinubu’s commitment to a comprehensive forensic audit. Commissioners from various states supported the call for an independent audit to avoid conflicts of interest.
The Ogun State Commissioner for Finance suggested that “an independent auditor should be engaged to ensure the exercise benefits all levels of government. Niger State’s finance commissioner echoed this sentiment, emphasizing the need for inclusiveness and objectivity.”
However, Rivers State cautioned that an independent auditor alone might not guarantee success, recommending a combined approach with both the OAuGF and external firms.
The audit aims to resolve outstanding subsidy claims, including the reduced N2.7 trillion claim against NNPCL identified by KPMG.
“KPMG, which carried out the earlier audit exercise of NNPC, had looked at some of the claims and recommended further audit to resolve them,” stated a representative from the Revenue Mobilization, Allocation and Fiscal Commission.
The meeting concluded with an agreement that the OAuGF will lead the audit, with the possibility of engaging external auditors for additional support if necessary. This move reflects the government’s effort to ensure accountability and transparency in NNPCL’s subsidy claims and financial practices