NNPC’s Trillion-Naira Subsidy Refund Request Sparks Outcry Amidst Questions Over Accounting Practices

Nigeria’s state oil firm, the Nigerian National Petroleum Company Limited (NNPC), is seeking a fresh subsidy refund of N1.19 trillion from the federal government, citing exchange rate differentials and backlogs in joint venture taxes for fuel importation. But state governments have sharply criticised the NNPC’s request, raising questions about the company’s accounting practices and the murky handling of subsidy-related expenses.

The latest subsidy claim emerged from the Federation Account Allocation Committee’s (FAAC) Postmortem Sub-Committee report for September 2024. This report, obtained by The Punch, reveals that exchange rate differentials on fuel imports reached N5.31 trillion by July 2024—a staggering increase from N4.56 trillion recorded in June. According to the NNPC, these ballooning costs stem from fluctuating foreign exchange rates and delayed subsidy payments, exacerbating the fiscal pressure on Nigeria’s already strained Federation Account.

State finance officials, however, are not convinced. The FAAC Postmortem Sub-Committee expressed concern over discrepancies in NNPC’s reported figures, questioning the N1.19 trillion “balance brought forward” included in the company’s July ledger. This amount, the sub-committee argued, was missing from prior FAAC reports and should be formally resubmitted for consideration.

A government source confirmed that, while the NNPC attributes the amount to genuine under-recovery costs from June and July, essential details regarding fuel import volumes, pricing, and sales figures remain absent. The lack of transparency, critics argue, hampers the FAAC’s ability to verify the NNPC’s subsidy claims.

Despite official pledges to end subsidies, Nigeria has quietly borne the cost of fuel import under-recovery, effectively maintaining an indirect subsidy scheme. While President Bola Tinubu declared “subsidy is gone” during his May 2023 inauguration, the NNPC has since requested trillions of naira to cover its fuel import expenses. As fuel prices have risen by over 500% since Tinubu took office—from N175 per litre to N1,060 by October 2024—the public continues to feel the economic pinch.

International financial bodies such as the IMF and World Bank have also voiced concern, noting that Nigeria’s hidden subsidies, coupled with the NNPC’s opaque reporting, present a significant obstacle to fiscal stability and economic reform.

As scrutiny intensifies, FAAC has directed the NNPC to submit a comprehensive breakdown of its petrol import costs, including quantities and retail values. The committee is urging the government and the NNPC to prioritise transparency, with calls mounting for the oil giant to account for all outstanding payments as Nigeria grapples with the complex realities of subsidy reform and fiscal accountability.