JUST IN: Auditor-General’s Report Alleges NNPC Diverted ₦514 Billion

A report from the Auditor-General of the Federation (OAuGF) has implicated the Nigerian National Petroleum Corporation (NNPC), now a limited company, of fund misappropriation, revenue diversion, and delayed remittance of earnings to the federation account in 2021....CONTINUE READING>>>

Published in November 2024, the report highlighted unauthorised deductions of N82.9 billion from federation revenue for refinery rehabilitation. It also uncovered irregular deductions amounting to N343 billion from domestic crude sales at the source.

The audit revealed that N343.6 billion was deducted unilaterally from gross domestic crude sales for NNPC value shortfalls, strategic stock holding costs, crude oil and product pipeline losses, as well as pipeline maintenance and management costs. The company failed to provide detailed breakdowns of these deductions for audit purposes and was unable to justify the reasons behind them, the report noted.

In May 2021, NNPC was expected to remit a net payable sum of N127 billion but only transferred N77 billion, leaving N50 billion unaccounted for. The report attributes these discrepancies to weaknesses in NNPC’s internal controls.

These deductions contravene the 2009 Financial Regulations. Consequently, the OAuGF has urged Mele Kyari, NNPCL’s group chief executive officer (GCEO), to explain the unauthorised deductions, remit the outstanding funds to the federation account, and provide proof of remittance. Failure to comply could lead to sanctions for irregular payments and gross misconduct.

In addition, NNPC was found to have deducted N82.9 billion from crude oil and gas sales in 2020 and 2021, citing refinery rehabilitation. However, these deductions were not supported by proper authorisations or approvals.

Further review of the audit report uncovered a contentious payment of N3.7 billion made to a company, allegedly to cover a shortfall in the sale of a cargo of Premium Motor Spirit (PMS).

In 2021, an internal memo instructed marketers to deposit naira sales proceeds in advance into the company’s specified accounts. From these accounts, N3.7 billion was used to purchase foreign exchange through the NNPC Group Treasury to settle suppliers.

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The Auditor-General noted that the details of this transaction, involving the NNPC, the Pipelines and Product Marketing Company (PPMC), and the company in question, were not made available for auditing purposes.

This practice was in breach of Paragraph 603(i) of the Financial Regulations (FR), which mandates that all payment vouchers must include comprehensive details, such as dates, quantities, and rates, to ensure they can be verified without additional documentation. Supporting documents like purchase orders and invoices must also be attached.

In addition, Paragraph 415 of the Financial Regulations stipulates that government officials must exercise financial prudence and avoid unnecessary expenditures, even if funds are allocated.

Also, Paragraph 3106 states that any public officer responsible for irregular payments must explain within 21 days. Failing this, the amount involved will be recovered, and the officer will face removal from their duties.

The auditor-general expressed concerns that the actions of the NNPC could have led to a loss of public funds. He recommended the recovery of the N3.7 billion and its remittance to the treasury.

At the time of reporting, it remained unclear whether the NNPC management had addressed the audit queries. Efforts to contact Olufemi Soneye, spokesperson for NNPC, were unsuccessful, as he did not respond to calls or respond to text messages sent to him.

In response to the revelations, the Socio-Economic Rights and Accountability Project (SERAP) has demanded accountability from Kyari, GCEO of the NNPC.

SERAP called for the identification and prosecution of individuals involved, urging their handover to the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC).

“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 emphasised that Section 15(5) of the Nigerian Constitution 1999 (as amended) requires public institutions to abolish all corrupt practices and abuse of power.