How NNPC diverted N514bn from federation account in 2021- AuGF

The Office of the Auditor General of the Federation (OAuGF) has revealed how the defunct Nigerian National Petroleum Corporation (NNPC) diverted N514 billion from the federation account in 2021.

In a report published on November 27, 2024 but seen by Ripples Nigeria on Tuesday, OAuGF discovered an unauthorised deductions of N82.9 billion from the federation account for refinery rehabilitation.

It also uncovered irregular deductions amounting totalling N343 billion from domestic crude sales at the source.

The audit revealed that N343.6 billion was deducted unilaterally from gross domestic crude sales for NNPC value shortfalls, strategic stock holding costs, crude oil and product pipeline losses, as well as pipeline maintenance and management costs.

The report noted that the company failed to provide detailed breakdowns of these deductions for audit purposes and was unable to justify the reasons behind them.

In May 2021, NNPC was expected to remit a net payable sum of N127 billion but only transferred N77 billion, leaving N50 billion unaccounted for.

The report attributed these discrepancies to weaknesses in NNPC’s internal controls.

The report read: “These deductions contravened the 2009 Financial Regulations. Consequently, the OAuGF has urged Mele Kyari, NNPCL’s group chief executive officer (GCEO), to explain the unauthorised deductions, remit the outstanding funds to the federation account, and provide proof of remittance. Failure to comply could lead to sanctions for irregular payments and gross misconduct.

“In addition, NNPC was found to have deducted N82.9 billion from crude oil and gas sales in 2020 and 2021, citing refinery rehabilitation. However, these deductions were not supported by proper authorisations or approvals.”

Further review of the audit report uncovered a contentious payment of N3.7 billion made to a company, allegedly to cover a shortfall in the sale of a cargo of Premium Motor Spirit (PMS).

In 2021, an internal memo instructed marketers to deposit naira sales proceeds in advance into the company’s specified accounts. From these accounts, N3.7 billion was used to purchase foreign exchange through the NNPC Group Treasury to settle suppliers.

The OAuGF noted that the details of this transaction, involving the NNPC, the Pipelines and Product Marketing Company (PPMC), and the company in question, were not made available for auditing purposes.

This practice was in breach of Paragraph 603(i) of the Financial Regulations (FR), which mandates that all payment vouchers must include comprehensive details, such as dates, quantities, and rates, to ensure they can be verified without additional documentation. Supporting documents like purchase orders and invoices must also be attached.

In addition, Paragraph 415 of the Financial Regulations stipulates that government officials must exercise financial prudence and avoid unnecessary expenditures, even if funds are allocated.

Also, Paragraph 3106 states that any public officer responsible for irregular payments must explain within 21 days. Failing this, the amount involved will be recovered, and the officer will face removal from their duties.