A report by the Auditor-General of the Federation’s Office has nailed the Nigerian National Petroleum Corporation Limited (NNPCL) in the misappropriation of public funds and non-timely remittance of revenue to the federation account in 2021.
The findings are revealed in the 2021 Auditor-General’s annual report published in November 2024 and recently submitted to the National Assembly as required by the Constitution.
The 558 page report observed that N343,642,598,726.51 was deducted from the gross domestic crude sales as NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil, and Products Pipeline Losses, as well as the pipeline maintenance and management costs.
This action, according to the Auditor-General, lacked proper authorization and raises serious accountability issues.
From the review of NNPCL payment records for 2020 and 2021, the audit observed that N82.9 billion was “deducted from the sale of Crude Oil and Gas (Federation Revenue) from the 2020 and 2021 records, and a total of N82.9 billion which were deducted at source for purported Refineries Rehabilitation.”
The report said the above transactions were not supported by “evidence of authorisation and approvals before the deductions were made.”
The auditor general said the anomalies discovered in the accounts of the NNPCL could be attributed to weaknesses in its internal control system.
“It could also amount to misappropriation of funds, diversion of revenue meant for the federation and loss of federation revenue”, the report stated.
The deductions of funds violated Section 162 (1) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) which states: “The Federation shall maintain a special account to be called “the Federation Account” into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or Department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.”
Similarly, it contravenes paragraph 213(ii) of the Financial Regulations (FR), which states that “On no account shall any withdrawal be made from the revenue account other than for the purpose of transfer to the consolidated account.” In addition, paragraph 223 of the FR 2009 states, “No deductions shall be made from any revenue collections or other receipts to adjust a previous over-credit. The gross amount received must, on all occasions, be accounted for in full. The procedure for refunds of revenue and advance payments above is prescribed in Financial Regulations 3006.”
Auditors fear that the NNPCL’s actions may have resulted in the misappropriation of funds and the diversion of revenue meant for the federation.
The report then recommended that henceforth, the Group Chief Executive of NNPCL should ensure that amounts due for the “Federation Account are not subjected to any deductions before remittance of the net.”
It added that in May 2021, the net payable which could have been remitted ought to have been N127 billion but only N77 billion was remitted by the NNPCL, leaving an unremitted balance of N50 billion to the Federation Account, which has remained largely unaccounted for.
Again, these irregular deductions are in breach of the 1999 Nigerian Constitution and 2009 Financial Regulations.
In this regard, the GCEO of the NNPCL was asked to provide reasons to the Public Accounts Committees of the National Assembly, why N343.6 billion was unilaterally deducted from the Federation Account revenue proceeds at source for the months of March and May 2021, contrary to the provisions of extant financial laws.
The auditor general also wants the N343 billion recovered “and remitted to the treasury.”
The auditor general fears that the NNPCL’s actions may have resulted in a loss of public funds.
It is unclear whether the NNPCL management had responded to the queries raised by the auditor general as of the time of filing this report.
However, following these revelations, the Socio-Economic Rights and Accountability Project (SERAP) directed the GCEO of NNPCL, Mele Kyari, to account for the misappropriated funds.
The CSO demanded that Kyari identify and hand over those suspected of involvement to the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission.
“According to the recently published 2021 audited report by the Auditor-General of the Federation (AGF), the Nigerian National Petroleum Company Limited (NNPCL) failed to account for over
“N825 billion and $2.5 billion of public funds meant for refinery rehabilitation and repairs, and other oil revenues,” SERAP noted.
SERAP stressed that Section 15(5) of the Nigerian Constitution 1999 (as amended) requires public institutions to abolish all corrupt practices and abuse of power.