NNPCL’s Financial Improprieties: A Multi-Year Saga of Diversions and Lack of Transparency
The Nigerian National Petroleum Company Limited (NNPCL), a pivotal entity in Nigeria’s economy, has been embroiled in a series of financial controversies over the past few years, casting a shadow over the nation’s financial standing. Reports from the Auditor-General of the Federation, spanning from 2017 to 2021, reveal a pattern of significant financial diversions amounting to trillions of naira and millions of dollars. These diversions, coupled with a lack of transparency and accountability, have raised serious concerns about the NNPCL’s corporate governance and its impact on the Nigerian economy. The Auditor-General’s reports, submitted to the National Assembly, detail numerous infractions against the Nigerian Constitution and financial regulations, further highlighting the gravity of the situation.
The diverted funds, as identified by the Auditor-General’s reports, paint a troubling picture of financial mismanagement. In 2017, a staggering N1.33 trillion was diverted, followed by N681.02 billion in 2019. 2020 saw a diversion of N151.12 billion and $19.77 million, while 2021 recorded a diversion of N514 billion. These diversions, totaling over N2.68 trillion and $19.77 million over the four-year period, represent substantial losses to the Nigerian Federation Account, impacting the resources available for allocation to various tiers of government. What’s particularly concerning is the NNPCL’s apparent disregard for these findings, with no documented responses or justifications provided to the Auditor-General for the identified infractions. This silence further fuels concerns about the company’s commitment to transparency and accountability.
The NNPCL’s financial dealings have not gone unnoticed by international organizations. The World Bank, in its Nigeria Development Update, has labeled the NNPCL as an opaque company due to its limited financial transparency, particularly regarding subsidy arrears and the impact of subsidy removal on federation revenues. This assessment echoes earlier criticisms from former Central Bank Governor, Sanusi Lamido, who called the NNPCL the "most opaque oil company in the world" during his tenure. Lamido criticized the NNPCL for allegedly withholding forex remittances to the government and for concealing details of its joint ventures, oil-backed loans, and production-sharing agreements from the public. These criticisms highlight the longstanding concerns about the NNPCL’s lack of transparency and its potential impact on Nigeria’s economic stability.
The Auditor-General’s reports detail a litany of financial infractions by the NNPCL, ranging from unauthorized deductions from the federation account to discrepancies in reported remittances and incomplete information on crude oil allocations. One of the most significant infractions involved the unauthorized deduction of N1.33 trillion in 2017 from revenue payable to the federation account, a clear violation of the Nigerian Constitution. Other issues included discrepancies in the amounts transferred to the federation account, lack of documentation for crude oil lifted for domestic use, and incomplete reporting of crude oil losses. The repeated nature of these infractions suggests systemic weaknesses in the NNPCL’s financial management and internal control systems.
The issues persisted in subsequent years. In 2019, the audit report uncovered seven major financial infractions totaling N681.02 billion. These included discrepancies between reported remittances and actual transfers to the federation account, a lack of documentation for domestic crude oil lifting, and incomplete reporting of crude oil losses. In 2020, the Auditor-General called for the National Assembly’s intervention to recover N151.12 billion in revenue unjustifiably deducted by the NNPCL, purportedly for priority projects without proper documentation or approval. The 2021 report revealed unauthorized deductions for operational costs without supporting documentation, unremitted balances, and deductions for refinery rehabilitation without proper authorization. These recurring issues highlight the need for urgent reforms within the NNPCL.
Civil society organizations have voiced their concerns about the NNPCL’s financial practices. The Centre for Anti-Corruption and Open Leadership (CACOL) described the NNPCL as a hub of institutional corruption, alleging that powerful interests within and outside the government shield the organization from accountability. CACOL’s Executive Director, Debo Adeniran, expressed concerns about the NNPCL’s continued opacity despite the Petroleum Industry Act, which aimed to enhance transparency and accountability. Similarly, the Executive Director of the Civil Society Legislative Advocacy Centre (CISLAC), Musa Rafsanjani, criticized the lack of accountability, holding not only the NNPCL responsible but also President Bola Tinubu, the National Assembly, and security agencies. He called for a stronger commitment from all stakeholders to address the alleged corruption within the NNPCL and promote greater transparency in the oil sector. The calls for accountability and transparency from these organizations underscore the urgent need for comprehensive reforms to ensure the NNPCL operates responsibly and in the best interests of the Nigerian people.
