Nigeria to Audit N2.7tn Subsidy Claims as Questions Linger Over Transparency
The Office of the Auditor-General of the Federation (OAuGF) has received critical documentation to validate the Nigerian National Petroleum Company Limited’s (NNPCL) N2.7 trillion fuel subsidy claims, according to recent reports. The Federal Government, through the Ministry of Finance, has also outlined the scope of work and terms of reference for an external auditing firm to support the investigation.
This follows the government’s April 2024 announcement of a comprehensive audit into subsidy claims from 2015 to 2021, a period marked by significant controversy. An earlier review by KPMG had already reduced NNPCL’s claim from N6 trillion to N2.7 trillion, sparking calls for deeper scrutiny.
The audit takes on heightened significance in the wake of President Bola Tinubu’s removal of the fuel subsidy in May 2023, when NNPCL’s Group CEO, Mele Kyari, revealed that the government owed the company N2.8 trillion. “We have not received any payment from the Federation,” Kyari noted at the time, stressing that NNPCL had been financing the subsidy from its own cash flow.
Minutes from the Federal Allocation Accounts Committee (FAAC) meeting in September 2024 reveal that the OAuGF has now begun the forensic audit, with assurances that it will be conducted meticulously. Ali Mohammed, Director of Home Finance, indicated that external auditors would work alongside the OAuGF to ensure the process adheres to best practices.
However, concerns persist among industry observers. Professor Wumi Iledare, an energy expert, questioned why NNPCL allowed such significant arrears to accumulate. He also called for extending the audit to include funds the company collected on behalf of the government. Similarly, Professor Dayo Ayoade from the University of Lagos criticised the opaque relationship between the government and NNPCL, describing it as a barrier to accountability.
Despite these concerns, the government has reported progress in revenue reconciliation. In the first seven months of 2024, revenue-generating agencies refunded over N1.19 trillion in arrears to the Federation Account, with $214.32 million (N289.01 billion) added in July alone. Yet unresolved discrepancies remain, including $273.7 million (N3.65 trillion) in outstanding payments, according to FAAC documents.
Efforts to address these gaps are ongoing, with a sub-committee working alongside the Nigerian Upstream Petroleum Regulatory Commission, the Federal Inland Revenue Service, and NNPCL. Still, unresolved payments dating back to before June 2023 amount to $180.2 million and N2.54 trillion, underscoring the challenges of reconciling years of financial mismanagement.
NNPCL spokesperson Femi Soneye sought to allay fears, confirming that reconciliation is underway and pledging public disclosure once the process is complete. But with experts calling for systemic reforms, the audit represents not just a test of financial oversight but also a broader reckoning for Nigeria’s troubled subsidy regime.
