The NNPCL Scandal: Billions Diverted, Accountability Evaded – Nigeria’s Oil Giant Under Fire

 

Amid ongoing concerns over Nigeria's financial health, the Nigerian National Petroleum Company Limited (NNPCL) has been accused by the Auditor-General of the Federation of diverting a staggering N2.68 trillion and $9.77 million over the past four years. These allegations, spanning from 2017 to 2021, have raised serious questions about the corporation's transparency and adherence to financial regulations.

Breakdown of Alleged Diversions

An investigation by Sunday PUNCH, based on the Auditor-General's annual reports, reveals the following breakdown of funds diverted by NNPCL:

• 2017: N1.33 trillion
• 2019: N681.02 billion
• 2020: N151.12 billion (approximately $19.77 million)
• 2021: N514 billion

The total sum of these misappropriations amounts to N2.68 trillion and $19.77 million. These figures were flagged in reports submitted to the National Assembly, which highlighted violations of the Nigerian Constitution and the 2009 Financial Regulations Act. Notably, NNPCL failed to provide adequate responses or justifications for these financial discrepancies during the review period.

Transparency Concerns and Historical Criticism

The NNPCL has long been criticized for its lack of transparency, with global organizations such as the World Bank noting the company’s opaqueness in its financial dealings. The bank’s 2023 Nigeria Development Update cited concerns over unresolved subsidy arrears and the unclear financial impact of subsidy removal on national revenues. Even former Central Bank Governor Sanusi Lamido Sanusi, who led the bank from 2009 to 2014, labeled the NNPCL the “most opaque oil company in the world” for its failure to remit adequate foreign exchange into government coffers and its secrecy surrounding joint ventures and oil-backed loans.

Financial Irregularities: 14 Key Infractions

The Auditor-General’s report outlined 14 major financial infractions committed by the NNPCL, including unauthorized deductions, discrepancies in revenue remittances, and lack of transparency in oil allocations. Notably:

• In 2017, NNPCL deducted N1.33 trillion from the Federation Account without authorization, violating the Nigerian Constitution, which mandates that all revenues collected by the government must be deposited into the Federation Account.
• In 2019, a discrepancy of N663.89 billion was found between the NNPCL's audited accounts and the remittances recorded by the Accountant-General. The oil firm also failed to provide necessary documentation for the allocation of crude oil to refineries, resulting in a lack of accountability.
• In 2020, the company was accused of unjustifiably deducting N151.12 billion from oil royalties before remitting them to the Department of Petroleum Resources (now the Nigerian Upstream Petroleum Regulatory Commission). No justification or documentation for these deductions was provided.
• In 2021, NNPCL was found to have deducted N343.64 billion from the sale of crude oil as "operational costs" without offering a breakdown of these costs, leaving N50 billion unaccounted for in the Federation Account.

Additional Issues in 2020 and 2021

Further investigations into NNPCL's financial records for 2020 and 2021 uncovered:

• The deduction of N82.95 billion for alleged refinery rehabilitation, which lacked proper authorization.
• A N3.75 billion shortfall in petrol sales not reported by the company.
• Misallocation of miscellaneous income from joint venture operations, amounting to N83.66 billion, which was deposited into the CBN/NNPC sinking fund rather than the Federation Account.

Calls for Accountability

Civil society groups such as the Centre for Anti-Corruption and Open Leadership (CACOL) have condemned the NNPCL, calling it a hub of institutional corruption. CACOL’s Executive Director, Debo Adeniran, expressed concerns over the lack of accountability and transparency, stating that powerful interests within and outside the government shield the company from scrutiny.

Adeniran further criticized the Petroleum Industry Act, which was intended to promote transparency and efficiency in the oil sector but has failed to dismantle the opacity surrounding NNPCL's operations. He claimed that despite efforts from agencies like the ICPC and EFCC, the company continues to evade serious investigation.

Musa Rafsanjani, Executive Director of the Civil Society Legislative Advocacy Centre (CISLAC), also criticized NNPCL’s lack of accountability. He called out the Nigerian government, including President Bola Tinubu, for not holding the company to a higher standard of transparency. Rafsanjani argued that the National Assembly and security agencies also share responsibility for the ongoing mismanagement, pointing to their failure to act on the numerous allegations.

Conclusion: Urgent Need for Reform

The ongoing allegations against the NNPCL underline the deep-rooted issues of corruption and mismanagement within Nigeria’s oil sector. As the country grapples with these financial challenges, calls for stronger oversight, transparency, and accountability have never been more urgent. For Nigeria to avoid further financial instability, it is crucial that the government takes decisive steps to address the ongoing misappropriations and ensure that the NNPCL is held accountable for its actions.