THE Office of Auditor-General of Nigeria has indicted the Nigerian National Petroleum Company Limited (NNPCL) of N514 billion in fraud.

The allegation is contained in the 2021 auditor-general’s annual report published in November 2024 and released recently.

It disclosed that the NNPCL misappropriated funds and diverted revenue meant for the Federation in 2021.

A breakdown of the allegations revealed that the auditor-general indicted the NNPCL for unauthorised deductions of N82.9 billion from federation revenue for refinery rehabilitation.

It knocked the state-owned oil company for its irregular deductions of funds from domestic crude sales at the source.

The audit observed that N82.9 billion was deducted from the sale of crude oil and gas from the 2020 and 2021 records, which were deducted at source for purported refinery rehabilitation.

It stated that the transactions were not supported by evidence of authorisation and approvals before the deductions were made.

It said the NNPCL action amounted to misappropriation of funds, diversion of revenue meant for the federation and loss of federation revenue.

The report further revealed that NNPC SAP payment recorded N484.7 billion as the gross amount generated for the sale of domestic crude for March and May 2021.

The report showed that N343.6 billion was “unilaterally deducted” from the gross domestic crude sales to fund NNPC value shortfall, strategic stock holding cost, crude oil and products pipeline losses, including pipeline maintenance and management costs.

Besides, stated that details of the deduction of each of the cost components were not provided for audit review.

The report further revealed that in May 2021, the net payable for remittance ought to have been N127 billion but only N77 billion was remitted by the NNPCL to the federation account.

The report also observed that N83.6 billion for miscellaneous income from the NNPC joint venture operations from the year 2016 to 2020 was sunk into the Central Bank of Nigeria (CBN)/NNPC sinking fund account instead of the federation account.

The attorney-general’s office, therefore, recommended that the group chief executive officer of the NNPCL explain to the public accounts committees of the National Assembly reasons for the appropriations.

It said the irregular deductions were in breach of the 1999 Constitution and 2009 Financial Regulations.

Section 162 (1) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) states that “the Federation shall maintain a special account to be called “the Federation Account” into which shall be paid all revenues collected by the government of the Federation, except the proceeds from the personal income tax of the personnel of the Armed Forces of the Federation, the Nigeria Police Force, the Ministry or Department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.”

It said the NNPCL also contravened paragraph 213(ii) of the Financial Regulations, which states, “On no account shall any withdrawal be made from the revenue account other than for transfer to the consolidated amount.”

Paragraph 223 adds that “No deductions shall be made from any revenue collections or other receipts to adjust a previous over-credit. The gross amount received must, on all occasions, be accounted for in full. The procedure for refunds of revenue and advance payments above is prescribed in Financial Regulations 3006.”

The NNPCL management did not respond to the queries and concerns raised by the auditor-general.

It, therefore, recommended that the NNPCL GCEO furnish reasons to the Public Accounts Committees of the National Assembly for the unauthorised deduction of funds and to recover and remit the sum of the lost funds to the federation account.

It also recommended that the GCEO ensure that the amounts due to the federation account were not subjected to any deductions before remittance of the net.

The auditor-general further revealed that the NNPCL did not provide details of the N3.7 billion transaction between it and the Pipeline and Product Marketing Company (PPMC) which was paid to the company as a shortfall in sales of MT cargo of petrol.

In a statement on Sunday, January 5, the Socio-Economic Rights and Accountability Project (SERAP) urged the NNPCL boss, Mele Kyari, to identify those suspected to be responsible for the disappeared oil money and hand them over to the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC).

“The grim allegations by the auditor-general suggest a grave violation of the public trust and the provisions of the Nigerian Constitution, national anti-corruption laws, and the country’s international obligations.

“The allegations have undermined the economic development of the country, trapped the majority of Nigerians in poverty, and deprived them of opportunities.”