NNPC in Financial Mess as Auditor-general Uncovers N514bn Unaccounted Funds
- An audit report has shown that NNPC Limited had unauthorised spending amounting to N514 billion in the 2021 financial year
- These unauthorised spendings include a massive deduction of over N83 billion from monies remitted to the federation's account
- The report, however, recommends that GCEO Mele Kyari be summoned to explain the spending and face sanctions
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience and a deep understanding of Nigeria's business and corporate space.
An audit report from the Auditor-General for the federation has revealed that the Nigerian National Petroleum Company (NNPC) spent N514 billion on unauthorised transactions.
The audit report of non-compliance/internal control weaknesses in the MDAs report discovered four financial infractions amounting to N514 billion during the 2021 financial year.
The biggest of the four was irregular deductions from domestic crude sales at source, amounting to N343.64 billion.
Source: UGC
In the financial year ending December 31, 2021, NNPC (now NNPC Limited) also made unauthorised deductions worth N82.95 billion from the federation revenue for refinery rehabilitation; as well as the warehousing of N83.66 billion from the federation’s miscellaneous income in a sinking fund account, the PUNCH reports.
Another infraction uncovered was the unsubstantiated payment of over N3.75 billion as shortfalls from the sale of petrol.
NNPC has no explanation for these deductions
The OAGF’s report notes that the infractions violate the 2009 Act of Financial Regulations and the Constitution of Nigeria.
The analysis of NNPC SAP payment records for March to May 2021 shows that out of N484.73 generated from the sales of 18,966,095 barrels of Domestic crude, NNPC authorised a deduction of N343.64bn as NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil and Products Pipeline Losses, and pipeline maintenance and management costs.
No explanation was provided for the auditor's review. In another part of the report, the audit revealed an unremitted N50 billion that remains unaccounted for after NNPCL remitted N77.075bn instead of N127.075bn.
Other issues uncovered
The audit also revealed an unauthorised deduction of N82.95 billion from the proceeds from the sale of Crude Oil and Gas, which was said to be for Refineries Rehabilitation. No approvals were backing these deductions from the federation’s revenue.
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There was also N3.75 billion that NNPCL paid to a company as a shortfall from the sales of petrol but failed to report it.
Another N83.66 billion miscellaneous income from NNPC’s joint ventures between 2016 and 2020 went into the CBN/NNPC sinking fund account rather than the Federation Account.
The audit attributed the infractions to a weak internal control system in the company, which has led to revenue loss for Nigeria.
Following the discoveries, the auditor recommended summoning the Public Accounts Committees of the National Assembly for the Group CEO to explain the infractions or face sanctions as stipulated in paragraphs 3106, 3112, 3115, and 3129 of the Financial Regulations 2009.
How smugglers made millions from subsidy
Meanwhile, Legit.ng recently reported that Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, explained how fuel smugglers made millions of naira by exploiting the flaws of the fuel subsidy regime.
Kyari spoke about cross-border smuggling and how a 6000-litre truck could net up to N17 million for the criminals.
He said all of these ended when President Bola Tinubu announced the removal of the fuel subsidy in May 2023.
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Source: Legit.ng
