The Nigerian government has unveiled plans to hire an external auditor to review the N2.7 trillion fuel subsidy claims made by the Nigerian National Petroleum Company Limited (NNPCL).

The goal is to assist the Office of the Auditor-General of the Federation (OAuGF) in determining the actual amount owed by the government to NNPCL for fuel subsidies.

According to official records, a forensic audit will focus on NNPCL’s claims from 2015 to 2021.

It aims to verify the N2.7 trillion withheld by NNPCL, with the Director of Home Finance stating that the OAuGF is still working on the matter.

Additionally, the Ministry of Finance’s Procurement Department has already put measures in place to hire an external auditor, who will support the OAuGF in conducting the review.

In the same meeting, the Chairman of the Commissioners’ Forum and Head of Finance from Ekiti State recommended that the audit period be extended to December 2023, given that the audit process has yet to begin.

This suggestion followed the initial proposal to launch the audit four months earlier during the Federation Allocation Accounts Committee’s April 2024 meeting.

Initially, NNPCL claimed that the government owed a total of N6 trillion for fuel subsidies. However, this amount was reduced to N2.7 trillion after a previous audit conducted by KPMG.

The forthcoming audit will cover six years to ensure accuracy and transparency in reconciling the subsidy claims.

This latest development follows the “subsidy is gone” declaration made by President Bola Ahmed Tinubu on May 30, 2023.

Shortly after this announcement, NNPCL’s Group Chief Executive Officer, Mele Kyari, informed reporters that the Federal Government still owed the company N2.8 trillion in outstanding subsidy payments.

According to Kyari, NNPCL has been covering the cost of petrol subsidies through its cash flow, as the government has been unable to make payments.

He highlighted that despite budgetary provisions of N6 trillion in 2022 and N3.7 trillion in 2023 for fuel subsidies, the Federal Government has not made any payments to NNPCL.

The company has had to absorb the cost, which is now an unsustainable financial burden.

Kyari emphasized that the government still owes NNPCL around N2.8 trillion and that the company cannot continue to carry the financial strain of the subsidy regime much longer.

The decision to engage an external auditor is seen as a crucial step towards resolving these financial discrepancies and determining the accurate amount of subsidy claims owed to NNPCL.

The audit is expected to shed light on the actual amount of debt and could potentially influence future subsidy policies and financial arrangements between NNPCL and the government.