The recently released audit report on the Federal Government’s Consolidated Financial Statement for the year ended December 31, 2021, has exposed significant financial irregularities involving the Nigerian National Petroleum Company Limited (NNPCL), the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), and the Nigeria Downstream and Midstream Regulatory Authority.
Prepared by the Office of the Auditor General of the Federation (OAuGF) and submitted to the National Assembly, the report highlighted unauthorized revenue deductions, non-remittance of funds to the Federation Account, and other breaches of financial regulations.
According to the report, the NNPCL deducted ₦82.95 billion from the sale of crude oil and gas under the guise of refinery rehabilitation without authorization.
The report attributed such actions to weaknesses in the NNPCL’s internal control systems, which could facilitate misappropriation and diversion of funds.
“There was no evidence of authorization and approvals before the deductions were made,” the report stated, adding that the NNPCL management failed to respond to audit queries, making the findings valid.
It also cited deductions totaling ₦343.64 billion for items such as “Value Shortfall,” “Strategic Stock Holding Cost,” and “Pipeline Losses.”
The audit noted that details justifying these deductions were not provided, further raising concerns about transparency.
The report revealed that ₦83.66 billion, described as miscellaneous income from joint venture operations between 2016 and 2020, was deposited in a CBN/NNPCL sinking fund account rather than the Federation Account.
This mismanagement, according to the Auditor General, forced the government to resort to borrowing to fund public activities.
Similarly, a shortfall of $253.95 million was noted in payments by the NNPCL to the Department of Petroleum Resources (DPR), while another ₦204.85 billion in oil royalties was allegedly deducted by the NNPCL for “priority projects” without justification.
The report also flagged unpaid oil royalties amounting to $1.74 billion and additional outstanding gas royalties of $13.8 million and ₦48.21 billion as of December 2021.
The NUPRC disclosed in the report that the NNPCL deducted funds for “Government Priority Projects” directly at source before remitting royalties, leaving the commission with no control over the process.
The Auditor General has called for the recovery of all unauthorized deductions and recommended that such violations attract penalties as outlined in the Financial Regulations.
The audit also uncovered a ₦3.74 billion payment made to a company as a shortfall on the sale of PMS cargo, with no supporting documents provided for review.