States Challenge NNPCL Over N1.19 Trillion Subsidy Claim Amid Growing Controversy

The Nigerian National Petroleum Company Limited (NNPCL) has come under scrutiny for requesting an additional N1.19 trillion subsidy refund for July 2024. The oil giant attributed the demand to exchange rate fluctuations and joint venture taxes tied to Premium Motor Spirit (PMS) importation, but state governments have raised concerns over the company’s accounting practices.

This development was highlighted in the Federation Account Allocation Committee (FAAC) Postmortem Sub-Committee’s September 2024 report, which revealed that exchange rate differentials ballooned from N4.56 trillion in June 2024 to N5.31 trillion in July 2024. According to NNPCL, the increase reflects unresolved subsidy payments and currency fluctuations.

Questionable Accounting Practices

The FAAC Sub-Committee flagged discrepancies in the NNPCL’s figures, noting the inclusion of a previously unreported N1.19 trillion in the company’s ledger. The report stated, “As of June 2024, the Exchange Rate Differentials stood at N4,558,597,379,030.6. This amount increased to N5,309,418,715,637.13 as of the July 2024 Federation Account.”

The committee emphasized that the additional amount, labeled as “balance brought forward,” was not recognized in earlier FAAC deliberations. “FAAC Postmortem did not recognize the Balance Brought Forward because it was not included in the FAAC report earlier submitted,” the report clarified.

During a September meeting with federal agencies, the NNPCL defended the figure, claiming it was the actual under-recovery amount, including adjustments for June and July 2024. “The Sub-Committee resolved that since NNPCL’s earlier report to FAAC did not include the sum of N1,186,540,693,485.36 brought forward, NNPCL should re-submit the amount for FAAC Plenary noting,” the report added.

Calls for Transparency and Accountability

The FAAC Sub-Committee also noted inconsistencies in earlier claims by the NNPCL. In June 2024, the company reported an outstanding claim of N4.34 trillion due to exchange rate differentials. However, it failed to provide critical details, such as the volume of PMS imported, pricing, and sales values.

A Federal Commissioner of the Revenue Mobilisation, Allocation, and Fiscal Commission criticized the lack of transparency, stating, “The Sub-committee observed that the details of the PMS volume, price, and sales value were not provided in the June 2024 Report of NNPC Limited to justify the exchange rate differentials recorded. The Sub-committee had resolved to request NNPC Ltd to provide the relevant information for further consideration.”

Rising Subsidy Costs Despite Official End

These revelations come amidst broader concerns over the fiscal burden of fuel subsidies, despite President Bola Tinubu’s declaration on May 29, 2023, that “subsidy is gone.” Recent reports suggest the government has quietly continued subsidizing fuel imports, contradicting public statements.

In June 2024, it was reported that the Federal Government planned to spend N5.4 trillion on fuel subsidies. Between January and June 2023 alone, N3.6 trillion was spent, far exceeding the N2 trillion expended in all of 2022.

The government has admitted that subsidy payments have strained the country’s finances. According to the Medium-Term Expenditure Framework (MTEF), “Despite recent reforms, petrol subsidies continue to have a significant adverse impact on oil revenues. Recently, the 2023 final dividend due to the federation was withheld for payment of fuel subsidies.”

Soaring Fuel Prices Add to Public Discontent

Meanwhile, Nigerians continue to grapple with skyrocketing fuel prices, which have risen by over 505% under Tinubu’s administration—from N175 in May 2023 to N1,060 in October 2024. These increases have compounded the financial struggles of ordinary citizens, further igniting criticism of the government’s handling of the subsidy regime.

With pressure mounting on the NNPCL to provide detailed and transparent records of its subsidy claims, the FAAC Sub-Committee has reiterated the need for accountability. It has directed the company to resubmit accurate figures and comprehensive documentation for future deliberations.