The Office of the Auditor-General for the Federation has revealed significant financial irregularities amounting to N514 billion in the operations of the Nigerian National Petroleum Company Limited (NNPCL) for the 2021 financial year.
The infractions, detailed in the 2021 audit report on non-compliance and internal control weaknesses in ministries, departments, and agencies (MDAs), highlight violations of Nigeria’s Constitution and the Financial Regulations Act of 2009.
Key Infractions Identified
1. Irregular Deductions from Domestic Crude Sales
The audit found that N343.64 billion was deducted at source from domestic crude oil sales. This included costs for value shortfalls, pipeline losses, and management expenses. However, NNPCL failed to provide a breakdown of these deductions, raising concerns over transparency and compliance with Section 162(1) of the Constitution, which mandates remittance of all revenues to the Federation Account.
2. Unauthorized Refinery Rehabilitation Deductions
The report uncovered N82.95 billion deducted from crude oil and gas revenue in 2020 and 2021 for refinery rehabilitation without requisite approvals or evidence of proper authorization.
3. Unsubstantiated Shortfall Payment
A sum of N3.75 billion was reported as a shortfall from the sale of petrol. The transaction, involving NNPC, PPMC, and a third-party company, lacked supporting documentation, raising questions about accountability.
4. Mismanagement of Miscellaneous Income
The audit also revealed that N83.66 billion in miscellaneous income from NNPC joint venture operations between 2016 and 2020 was diverted to a sinking fund account instead of being remitted to the Federation Account. This practice allegedly contributed to increased borrowing by the government.
Federation Revenue Losses
The report noted that a revenue shortfall of N50 billion from crude sales in May 2021 remains unaccounted for. This anomaly, attributed to weaknesses in NNPCL’s internal control system, represents a potential loss or misappropriation of public funds.
Additionally, the Federal Government recorded a revenue shortfall of N2 trillion during the audit period. While revenue projections were pegged at N6.64 trillion, actual revenue amounted to only N4.64 trillion.
