The Nigerian National Petroleum Company Limited (NNPCL) has come under intense scrutiny following allegations of financial mismanagement that have negatively impacted the nation’s financial standing.
According to findings based on annual reports from the Auditor-General of the Federation, the NNPCL diverted a total of N2.68tn and $9.77m between 2017 and 2021.
The reports, submitted to the National Assembly, detailed violations of the Nigerian Constitution and the 2009 Act of Financial Regulations.
In 2017 alone, N1.33tn was allegedly diverted, followed by N681.02bn in 2019, N151.12bn in 2020, and N514bn in 2021. Despite these infractions being raised by the Auditor-General, the NNPCL reportedly failed to respond or justify its actions within the review period, violating principles of good corporate governance.
The Auditor-General’s findings accuse the NNPCL of 14 financial infractions, including unauthorized deductions of N1.33tn from the Federation Account in 2017, discrepancies amounting to N663bn in funds transferred to the Federation Account in 2019, and incomplete documentation of crude oil allocations.
The audit revealed that in 2017, from a total revenue of N2.41tn payable to the Federation Account, the NNPCL deducted N1.33tn without authorization before remitting only N1.07tn.
This action contravenes Section 162 (1) of the 1999 Constitution, which requires that all revenue collected by the government be paid into a special account known as the Federation Account.
The report also uncovered financial discrepancies in 2019, where the NNPCL reportedly remitted N519.92bn of the N1.27tn generated through the National Petroleum Investment Management Services.
The Auditor-General highlighted a N663.89bn discrepancy between the NNPC-NAPIMS audited account and records from the Accountant-General of the Federation, noting a lack of transparency in the transfer of funds.
The report further noted that over 107 million barrels of crude oil were lifted as domestic crude without proper documentation, while information on crude oil allocations and sales from May to December 2019 was unavailable for review.
In 2020, the Auditor-General called on the National Assembly to intervene in recovering N151.12bn in revenue that the NNPCL had allegedly deducted without justification.
The audit revealed that these deductions, purportedly for government priority projects and crude oil losses, lacked proper documentation or approval from the Federation Account Allocation Committee.
The allegations against the NNPCL add to longstanding criticisms of the corporation’s lack of transparency.
The World Bank, in its December 2023 Nigeria Development Update, described the NNPCL as opaque, with limited accountability in its financial dealings, including subsidy arrears and revenue management.
This perception dates back to 2014 when the former governor of the Central Bank of Nigeria, Sanusi Lamido, labeled the NNPCL as “the most opaque oil company in the world.”
Sanusi criticized the company for failing to remit adequate foreign exchange revenues and for keeping its joint ventures and oil-backed loans hidden from public scrutiny.
The NNPCL’s financial dealings continue to raise concerns about governance and accountability in Nigeria’s oil sector.
The Auditor-General’s findings have prompted calls for reforms to ensure transparency, proper oversight, and adherence to the constitutional provisions governing the nation’s finances.
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