OAGF Accuses NNPC of N514bn Financial Infractions

The Office of the Auditor-General for the Federation (OAGF) has revealed alleged financial irregularities totaling N514 billion in the Nigerian National Petroleum Company Limited’s (NNPCL) operations for the financial year ending December 31, 2021.

The OAGF’s audit report highlights four major infractions:

1. Unjustified Deductions: N343.64 billion was deducted from domestic crude oil sales without proper documentation.
2. Misplaced Funds: N83.66 billion, categorized as miscellaneous income, was deposited in a sinking fund account instead of the Federation Account.
3. Unauthorised Refinery Rehabilitation Costs: N82.95 billion was deducted from federation revenue without prior approval.
4. Unaccounted Payments: N3.75 billion was paid to a company as a shortfall from petrol sales, with insufficient details provided for audit scrutiny.

Audit Findings

The report, obtained on Sunday, states that these practices violate the Nigerian Constitution and the 2009 Financial Regulations Act. The Auditor-General criticized NNPCL for failing to provide explanations or justifications for the highlighted issues.

For instance, an audit of NNPCL’s payment records from March to May 2021 showed that N343.64 billion was deducted as operational costs from N484.73 billion generated from domestic crude sales. However, NNPCL did not provide a breakdown of these costs.

Additionally, the report found that only N77.075 billion out of a net payable amount of N127.075 billion was remitted to the Federation Account in May 2021, leaving an unremitted balance of N50 billion.

Other Concerns

The audit also uncovered:

• Refinery Rehabilitation Deductions: N82.95 billion was deducted for refinery rehabilitation in 2020 and 2021 without authorization.
• Petrol Sales Shortfall: N3.75 billion paid to a company for a shortfall in PMS sales lacked sufficient documentation.
• Miscellaneous Income Mismanagement: N83.66 billion, derived from joint venture operations between 2016 and 2020, was diverted to a sinking fund, forcing the Federation to rely on borrowings.

Recommendations

The report urged NNPCL’s Group Chief Executive Officer to provide detailed justifications for the spending to the National Assembly’s Public Accounts Committees or face sanctions for financial misconduct under the 2009 Financial Regulations.

This revelation comes amid a revenue shortfall of N2 trillion in 2021, as the Federal Government’s revenue projection of N6.64 trillion fell short, with actual revenue standing at N4.64 trillion.