The Nigerian National Petroleum Company Limited (NNPCL) has been accused by the Auditor-General of the Federation of diverting over N2.68 trillion and $9.77 million between 2017 and 2021. This accusation stems from findings outlined in the Auditor-General’s annual reports submitted to the National Assembly, which cite violations of the Nigerian Constitution and financial regulations.

Overview of Alleged Infractions

The Auditor-General’s reports highlight a series of financial infractions by NNPCL over the four-year period. Key findings include unauthorized deductions from the Federation Account, incomplete records of crude oil allocations, and non-compliance with statutory revenue remittance procedures. The corporation also allegedly failed to respond to or justify the irregularities flagged in the audit.

Breakdown of Diversions:

• 2017: N1.33 trillion was reportedly diverted through unauthorized deductions from revenues.
• 2019: N681.02 billion in discrepancies were uncovered in reported revenues and remittances.
• 2020: N151.12 billion and $19.77 million were allegedly deducted without proper authorization.
• 2021: N514 billion in operational costs and other deductions were not properly accounted for.

These alleged diversions amount to a staggering N2.68 trillion and $19.77 million, raising questions about the transparency of the corporation’s operations.

Specific Violations and Yearly Analysis

2017: Unauthorized Deductions

The report revealed that NNPCL deducted N1.33 trillion from N2.41 trillion in revenue meant for the Federation Account without authorization. This violation contravened Section 162(1) of the 1999 Constitution, which mandates that all revenues collected by the government be paid into a dedicated Federation Account.

2019: Discrepancies in Revenue Transfers

In 2019, the Auditor-General found discrepancies amounting to N663.89 billion between revenues reported by NNPCL and records maintained by the Accountant-General of the Federation. Additionally, the audit observed incomplete reports on crude oil allocations and losses valued at N5.498 billion.

2020: Unjustified Deductions

The audit disclosed that NNPCL deducted N151.12 billion from royalties due to the Department of Petroleum Resources (now Nigerian Upstream Petroleum Regulatory Commission) without clear justification. The deductions were reportedly for priority projects, handling costs, and crude oil losses, yet no evidence of approval or project details was provided.

2021: Operational Cost Deductions

In 2021, N484.73 billion was generated from crude oil sales, but N343.64 billion was deducted for operational costs without adequate documentation. Furthermore, N82.95 billion was deducted for refinery rehabilitation without authorization, and N3.75 billion was unreported as shortfalls in petrol sales.

Broader Issues in NNPCL’s Operations

The reports underline systemic issues in NNPCL’s financial management and governance. The World Bank and other international organizations have previously criticized NNPCL for its opacity and lack of transparency. The bank’s 2023 Nigeria Development Update highlighted the corporation’s role in perpetuating subsidy deductions and its limited accountability.

Former Central Bank Governor Sanusi Lamido also labeled NNPCL as the “most opaque oil company in the world,” accusing it of failing to remit sufficient foreign exchange earnings and hiding critical financial arrangements from public scrutiny.

Calls for Accountability

Civil Society Reactions

The Centre for Anti-Corruption and Open Leadership (CACOL) described NNPCL as a hub of institutional corruption, asserting that influential interests within the government shield the corporation from scrutiny. CACOL’s Executive Director, Debo Adeniran, criticized the Petroleum Industry Act for failing to decentralize and unbundle NNPCL effectively, leaving it as a “powerful cabal.”

Similarly, the Civil Society Legislative Advocacy Centre (CISLAC) blamed President Bola Tinubu and the National Assembly for not holding NNPCL accountable. CISLAC’s Executive Director, Musa Rafsanjani, emphasized the need for stronger oversight by legislative committees and security agencies to address corruption within the corporation.

Recommendations for Reform

Both CACOL and CISLAC called for stricter enforcement of financial regulations, greater transparency in NNPCL’s operations, and accountability for those involved in the alleged financial misconduct. They urged the government to dismantle the alleged cartel operating within the corporation and ensure compliance with international best practices.

Conclusion

The allegations of financial mismanagement against NNPCL underscore the urgent need for comprehensive reforms in Nigeria’s oil sector. The reported diversions of public funds not only violate constitutional provisions but also undermine the nation’s economic stability. As civil society organizations demand accountability, the onus is on the government and the National Assembly to act decisively in addressing these issues and restoring public trust in the management of Nigeria’s oil wealth.