Nigeria’s Auditor-General Report Accuses NNPCL Of Fund Misappropriation And Revenue Diversion

Nigeria's Auditor-General report accused the Nigerian National Petroleum Company Limited (NNPCL) of misusing funds and diverting revenue intended for the Federation in 2021.

The accusations are part of the 2021 Auditor-General's annual report, which was published in November 2024. The 558-page report has been submitted to the National Assembly as required by Nigeria's Constitution.

The report raises serious concerns about the NNPCL's handling of funds. One issue highlighted is the unauthorized deduction of N82.9 billion from the federation revenue for refinery repairs.

The NNPCL was also criticized for making irregular deductions from domestic crude sales, which the auditor general said violated the Nigerian Constitution and Financial Regulations regarding efficient spending.

The report recommended that the CEO of NNPCL explain to the Public Accounts Committees of the National Assembly why the funds were deducted without authorization. The NNPCL was also told to recover and return the missing funds to the government.

The audit reviewed NNPCL payment records for 2020 and 2021 and found that N82.9 billion was deducted from the sale of crude oil and gas, claiming it was for refinery repairs. This amount was deducted directly from the federation revenue.

The report mentioned that the deductions made by NNPCL were not backed by proper authorization or approvals. It suggested that the problems found in NNPCL's accounts were due to weaknesses in its internal control system.

These issues might have led to misappropriation of funds, diversion of revenue meant for the federation, and a loss of federation revenue. The deductions also violated Section 162 (1) of the Nigerian Constitution, which requires all government revenue to be paid into the Federation Account, except for certain specific taxes.

The audit report revealed that N484.7 billion was generated from the sale of domestic crude in March and May 2021. However, N343.6 billion was "unilaterally deducted" by NNPCL for various costs, including pipeline maintenance and strategic stockholding.

The report also highlighted that N83.6 billion, from the federation's miscellaneous income, was improperly placed in the CBN/NNPC sinking fund instead of the Federation Account. Moreover, N3.7 billion was controversially paid to a company for a shortfall in PMS cargo sales.

In response, the Socio-Economic Rights and Accountability Project (SERAP) called on Mele Kyari, the GCEO of NNPCL, to explain the missing funds, criticizing the violations as damaging to public trust and the country's development.