By Anastasia John E.
The Office of the Auditor-General for the Federation has uncovered at least four major financial infractions amounting to N514 billion in the operations of the Nigerian National Petroleum Company Limited (NNPC Ltd) for the financial year ending December 31, 2021.
The alleged infractions include irregular deductions worth N343.64 billion for operational costs from domestic crude sales at source, warehousing of N83.66 billion from the federation’s miscellaneous income in a sinking fund account, unauthorized deductions of N82.95 billion from federation revenue for refinery rehabilitation, and the unsubstantiated payment of N3.75 billion in shortfalls to a third-party company from petrol sales.
These audit issues, detailed in the 2021 audit report of non-compliance/internal control weaknesses in MDAs for the 2021 financial year obtained by our correspondent on Sunday, violate the Constitution of the Federal Republic of Nigeria and the 2009 Act of Financial Regulations.
The report states that NNPC Ltd failed to provide any response or justification for the infractions raised by the auditor-general.
Analyzing the deductions from domestic crude sales, the auditor-general stated that a review of NNPC Ltd SAP payment records from March to May 2021 showed that N484.73 billion was generated from the sales of 18,966,095 barrels of crude oil, but N343.64 billion was deducted as operational costs.
“The details of each of the cost components deducted were not provided for audit review. Hence, reasons for the deductions could not be justified by the Management,” the report stated.
This lack of transparency raises concerns about potential revenue loss to the Federation Account.
Another significant issue highlighted by the audit was the unauthorized deduction of N82.95 billion from the sale of Crude Oil and Gas (Federation Revenue) for purported Refineries Rehabilitation without proper authorization and approvals.
“This amount deducted at source for purported Refineries Rehabilitation was not supported with evidence of authorization and approvals before the deductions were made,” the report noted.
Furthermore, the audit observed that the national oil company failed to report N3.75 billion as a shortfall from the sales of petrol, paid to a third-party company.
“Details of the transaction between the NNPC Ltd, PPMC, and the company that gave rise to the sum of N3.75 billion which was paid to the company as shortfall on sales of MT cargo of PMS were not availed for audit,” the report stated.
Additionally, the audit found that N83.66 billion in miscellaneous income from NNPC Ltd joint venture operations from 2016 to 2020 was improperly diverted to the CBN/NNPC Sinking Fund Account instead of the Federation Account, potentially hindering the government’s revenue collection efforts.
The report recommended that the NNPC Ltd Group Chief Executive Officer be requested to furnish reasons for the spending to the Public Accounts Committees of the National Assembly or face sanctions relating to irregular payment and gross misconduct.
These audit findings come amidst ongoing efforts to reform the Nigerian oil and gas sector and underscore the need for greater transparency and accountability in the operations of NNPC Ltd.
