A 2021 audit report by the Office of the Auditor-General of the Federation has accused the Nigerian National Petroleum Company Limited (NNPCL) of misappropriating and diverting funds totaling N514 billion. The revelations, published in the Auditor-General’s annual report for 2021 and submitted to the National Assembly in November 2024, highlight significant financial irregularities in the state-owned oil firm’s operations.
The 558-page report outlines cases of unauthorized deductions, unaccounted funds, and breaches of financial regulations, raising concerns over NNPCL’s accountability and internal controls.
Unauthorized Deductions for Refinery Rehabilitation
One of the most glaring issues in the report is the N82.9 billion deducted from Federation revenue in 2020 and 2021 for refinery rehabilitation without proper authorization or approvals. These transactions were flagged for violating Section 162(1) of the Nigerian Constitution, which mandates that all revenue be deposited into the Federation Account.
The report attributed the anomalies to weaknesses in NNPCL’s internal control systems, which could lead to misappropriation of funds and revenue diversion. It recommended that the Group Chief Executive Officer (GCEO) of NNPCL provide explanations to the Public Accounts Committees of the National Assembly and ensure the recovery and remittance of the lost funds.
Irregular Deductions of N343 Billion
The audit also revealed that N343.6 billion was unilaterally deducted from gross domestic crude sales in March and May 2021. These deductions, labeled for costs such as “NNPC Value Shortfall” and “Pipeline Maintenance,” lacked supporting documents for audit verification.
The report further noted that out of N484.7 billion generated from domestic crude sales during the period, only N77 billion was remitted to the Federation Account, leaving N50 billion unaccounted for.
These actions were found to contravene financial regulations prohibiting deductions from revenue collections without proper authorization. The Auditor-General recommended the recovery of the funds and demanded explanations from the NNPCL management.
Miscellaneous Income Mismanagement
Another concerning issue was the mismanagement of N83.6 billion in miscellaneous income from joint venture operations between 2016 and 2020. Instead of being remitted to the Federation Account, the funds were warehoused in a sinking fund account managed by the Central Bank of Nigeria (CBN) and NNPCL.
The Auditor-General flagged this practice as a violation of Treasury Circular Ref. No. TRY/A12 & B12/2013, which mandates that unspent balances must be returned to the treasury. The report called for the recovery of the funds and questioned the rationale behind the diversion.
Questionable Payments and Losses
The report also uncovered a controversial payment of N3.7 billion to a company as a “shortfall” in sales of petroleum cargo. This transaction lacked the necessary documentation, violating financial regulations requiring full details for audit purposes.
The Auditor-General expressed concerns that such irregularities could lead to significant losses of public funds and demanded an explanation from NNPCL’s leadership.
Calls for Accountability
Reacting to the audit report, the Socio-Economic Rights and Accountability Project (SERAP) called on NNPCL’s GCEO, Mele Kyari, to address the issues and explain the whereabouts of the missing funds. SERAP urged the government to hold those responsible accountable and recover the misappropriated sums.
“These findings reveal a serious breach of public trust and financial laws,” SERAP said in a statement. “The mismanagement of public funds has deprived Nigerians of critical resources needed for development.”
The revelations have sparked widespread calls for increased transparency in the operations of NNPCL and other state-owned enterprises to safeguard public funds and uphold financial accountability.
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