Financial Accountability Crisis: NNPC Embroiled in ₦61.1 Billion Missing Payments Scandal
The Nigerian National Petroleum Company Limited (NNPC Ltd.) is once again facing a severe financial accountability crisis. A devastating 808-page audit report from the Office of the Auditor-General of the Federation (OAGF) has uncovered over ₦61.1 billion in questionable payments, breaches of financial regulations, and systemic internal control weaknesses.
The report, covering transactions between 2020 and 2021 during the tenure of former Group Chief Executive Officer (GCEO) Mele Kyari, highlights 28 major financial irregularities and has been transmitted to the National Assembly.
Table of Contents
The Audit Findings: ₦61.1 Billion in Questionable Payments
Major Infraction: Failure to Deduct Mandatory Taxes
Unauthorized and Irregular Payments Flaggings
Auditor-General’s Verdict: Systemic Weakness and Directives
1. The Audit Findings: ₦61.1 Billion in Questionable Payments
The Auditor-General’s report revealed a staggering array of financial irregularities linked to the NNPC, amounting to approximately ₦61.1 billion when foreign currencies are converted to Naira.
The questionable payments and breaches break down as follows:
Naira: ₦30.1 billion
US Dollars: $51.6 million
British Pounds: £14.3 million
Euros: €5.17 million
The audit report explicitly accuses the NNPC of weak internal controls, unauthorized fund transfers (virements), tax infractions, irregular procurement procedures, abandoned projects, and unsubstantiated settlements.
One of the most critical findings involved the NNPC’s failure to comply with mandatory tax regulations, specifically the non-deduction of 1 per cent Stamp Duty on payments to contractors and service providers.
Undeducted Payments: The non-deduction occurred on payments totaling ₦24.7 billion and $52.98 million.
Unpaid Taxes: This failure resulted in unpaid taxes amounting to ₦247 million and $529,863, representing a clear contravention of Treasury Circulars and Financial Regulations.
The NNPC management’s defense—that they were engaging the Federal Inland Revenue Service (FIRS) for clarification—was deemed “unsatisfactory” by the auditors. The GCEO was consequently ordered to recover and remit all unpaid taxes immediately.
3. Unauthorized and Irregular Payments Flaggings
The report detailed multiple instances of financial mismanagement, poor documentation, and unauthorized contract approvals.
A. Direct Sales Direct Payment (DSDP) Anomaly
Auditors flagged a $22.84 million payment to a contractor for the controversial 2017/2018 DSDP arrangement. Reconciliation records showed the contractor was not owed the amount. The NNPC’s defense, citing the dissolution of the relevant division and difficulty retrieving records, was dismissed. The payment was ruled “irregular,” and the recovery of the full amount was ordered.
B. Unauthorized Contract Renewal
The Chief Operating Officer (COO) Downstream was implicated in the unauthorized renewal of a vessel charter contract for one year, leading to a payment of $1.8 million within nine months without proper approval. The justification—citing COVID-19 lockdown for “anticipatory approval”—was rejected, with the OAGF warning against payments without a legal basis.
C. Undocumented Project Payments
Payments totaling $2.01 million and ₦478.5 million for the Atlas Cove Depot Optimisation Project were flagged due to the complete absence of invoices, receipts, or credible documentation.
D. Misdirected Funds for Vessel Charter
In a startling revelation, $1.03 million owed to a vessel charter contractor for services rendered between 2007 and 2010 was paid to a different company that had no contractual relationship with NNPC. The auditors ruled the indemnity agreement cited by NNPC as “unsatisfactory,” ordering the recovery of the full sum.
4. Auditor-General’s Verdict: Systemic Weakness and Directives
Across the 28 financial queries, the consistent complaints from the auditors included: weak internal control systems, poor or missing documentation, inability to provide verifiable SAP records, and irregular approvals.
Despite the NNPC providing responses, the auditors deemed them “consistently unsatisfactory.”
Directives to the GCEO
The Auditor-General directed the new GCEO, Bayo Ojulari (who replaced Mele Kyari), to:
Recover All Misapplied Funds: Ensuring every penny is returned.
Remit Funds to the Treasury: Paying recovered funds directly into government accounts.
Justify Payments: Providing adequate justification for all irregular payments before the Public Accounts Committees (PAC) of the National Assembly.
Ensure Full Compliance: Guaranteeing strict adherence to the Financial Regulations, 2009.
Do you think this latest, highly detailed audit—submitted directly to the National Assembly—will finally push the NNPC towards implementing the transparent internal controls necessary to end these recurring scandals?
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