The Nigerian National Petroleum Company Limited has requested an additional subsidy refund of N1.19 trillion for July 2024, citing exchange rate differentials on Premium Motor Spirit importation and joint venture taxes.
However, state governments have raised concerns over NNPCL’s accounting practices, questioning the latest request.
According to findings by The PUNCH, the Federation Account Allocation Committee Postmortem Sub-Committee report for September 2024 revealed that exchange rate differentials stood at N4.56 trillion as of June 2024. This figure increased to N5.31 trillion by July 2024, with the NNPCL attributing the rise to fluctuations in foreign exchange rates and unresolved subsidy payments from previous months.
The FAAC Sub-Committee raised concerns over NNPCL’s accounting practices, noting discrepancies in the figures submitted. The NNPCL’s report included N1.19 trillion as a balance brought forward, contributing to the overall claim of N5.31 trillion. However, the Sub-Committee noted that this amount had not been included in earlier FAAC reports and was therefore not recognised in its deliberations.
The Sub-Committee recommended that the NNPCL re-submit the figure for consideration at the next plenary.
Further scrutiny of the NNPCL’s claims revealed additional issues, including missing documentation. Minutes of a previous FAAC meeting indicated that as of June 2024, the NNPCL had reported an outstanding claim of N4.34 trillion against the Federation.
The claim, which was tied to exchange rate differentials, lacked essential details, including the volume of PMS imported, pricing, and sales values. The Federal Commissioner of the Revenue Mobilisation, Allocation, and Fiscal Commission stated that the omission of these details made it difficult for the Sub-Committee to justify the figures submitted.
The NNPCL’s request for an additional subsidy refund has raised concerns over the fiscal impact of subsidy payments on the Federation Account. Exchange rate fluctuations and the rising cost of importing PMS have continued to strain government revenues, raising questions about the sustainability of the partial subsidy framework.
The FAAC Postmortem Sub-Committee has emphasised the need for transparency and accountability in subsidy-related reporting. It noted that the discrepancies in the NNPCL’s submissions had delayed the reconciliation process, which had already been referred to the Presidential Alignment Committee.
The sub-committee also urged the NNPCL to ensure the inclusion of all outstanding amounts and a comprehensive breakdown of its PMS importation records in future reports. The government’s subsidy payments have been a subject of controversy, with President Bola Tinubu declaring an end to subsidies during his inauguration in May 2023.
However, the International Monetary Fund, the World Bank, and other authoritative figures have contested this claim, arguing that the government had quietly reintroduced fuel subsidies.
