The Nigerian Nationwide Petroleum Firm Restricted (NNPC) faces recent scrutiny because the Auditor-Common’s new report accuses the state oil agency of fund misappropriation, inflated contracts, irregular funds and failure to deduct statutory taxes.
The anomalies, which occurred between 2020 and 2021, contain over $51 million in questionable settlements.
The 808-page report, printed in September 2025 and lately submitted to the Nationwide Meeting, particulars systemic violations of economic laws, weak inside controls, and unexplained funds made below controversial contracts.
In a single occasion, the audit revealed that NNPC did not deduct the statutory 1 per cent Stamp Obligation on funds totalling N24.7 billion and $52.98 million to contractors and repair suppliers. This quantities to unpaid taxes of N247 million and $529,863.
The audit famous that this contravenes Treasury Circulars and Monetary Laws, which mandate accounting officers to deduct and remit Stamp Obligation, Worth Added Tax (VAT), and Withholding Tax (WHT) to the Federal Inland Revenue Service (FIRS).
The report warned that such lapses create dangers of overpayment to contractors, diversion of funds, and lack of authorities income.
NNPC administration advised the auditor that it’s partaking the FIRS to find out applicability and compliance necessities for the deductions. Nonetheless, the auditor deemed the response unsatisfactory. Consequently, the findings stay legitimate till suggestions are carried out.
The auditor directed the Group Chief Government Officer (GCEO) to account for the unpaid taxes, get well and remit the sums to the Treasury, and supply proof to the Public Accounts Committees (PAC) of the Nationwide Meeting.
The GCEO on the time of the infractions was Mele Kyari, who assumed workplace in 2019 and remained in workplace till he was eliminated earlier this 12 months and changed by Bayo Ojulari.
In one other question, the report additionally flagged $22.84 million paid to a contractor for 2017/2018 Direct Gross sales Direct Fee (DSDP) contracts. Whereas crude oil and petroleum merchandise have been provided, reconciliations indicated that quantities owed to NNPC have been far beneath what was paid.
In its response to the auditor, NNPCL acknowledged that the Crude Oil Advertising and marketing Division (COMD), which managed the DSDP contracts in the course of the interval, now not exists.
“As a part of the transition to NNPC Ltd., a number of modifications in construction and operations have occurred, resulting in challenges in retrieving data associated to this transaction resulting from inadequate data. Kindly present the SAP Quantity, and we are going to retrieve all required paperwork,” the state oil agency stated.
The auditor stated this response was unsatisfactory, leaving the irregular fee unresolved.
The auditor additionally instructed the GCEO to get well and remit $22.84 million to the federal government treasury.
In all circumstances, the audit highlighted weak inside controls, poor documentation, and potential diversion of public funds.
The NNPC administration responded to all the problems, however they have been constantly judged unsatisfactory by auditors.
The report known as on the NNPC chief to justify all irregular funds to the Public Account Committee of the Nationwide Meeting, get well misapplied funds, remit them to the treasury, and adjust to the Monetary Laws of 2009.
Unauthorised Contract Renewals
The audit noticed that the Chief Working Officer (COO) Downstream of the NNPCL single-handedly renewed a contract for Constitution Rent of Coastal Vessel and provision of MT Barwasa on emergency grounds for one 12 months (1 Might 2020 – 30 April 2021).
Funds of $1.8 million have been made for 9 months earlier than official approval, the report stated.
NNPC cited the COVID-19 lockdown as justification for anticipatory renewal to keep up operations, however the auditor deemed the reason unsatisfactory.
The report famous that such anomalies threat authorities funds with out a contractual foundation and potential compromise of funds, reflecting weaknesses in NNPC Ltd’s inside management system.
Provisional funds with out supporting paperwork
The audit additionally highlighted funds of $2.01 million and N478.5 million for the Atlas Cove Depot Optimisation Venture with out invoices or receipts.
NNPCL claimed that the offered references have been inadequate for tracing the transaction. “The SAP doc reference 15000076 dated 4 March 2021 doesn’t precisely match the corresponding transaction. To allow complete verification, we request that the audit group present the right SAP particulars,” the administration stated.
The auditor, nevertheless, insisted that the funds have been irregular and instructed the GCEO to get well and remit $2.01 million and N478.5 million to the Treasury and report back to PAC.
$8.2 million paid for the emergency set up of custody switch metres
NNPC awarded a contract on 28 June 2019, for emergency procurement and set up of custody switch metres on crude and product pipelines at eleven places for $8.21 million.
After milestone funds and a 2 per cent low cost on the excellent stability, the revised contract worth grew to become $8.23 million.
The auditor famous that the primary and second batches of meters have been delivered to the Port Harcourt workplace, quite than the desired places, violating contract provisions.
In its response, NNPC administration stated SAP particulars offered by the audit have been inadequate to hint the transactions and supporting paperwork. They requested that the audit group present the right SAP particulars to facilitate assessment.
However the audit stated their response was unsatisfactory, and the findings stay legitimate.
The GCEO was instructed to get well $8.2 million and remit the identical to the Treasury, and supply proof to the Public Account Committee of the Nationwide Meeting.
Fee for legacy debt
The audit noticed that an organization was engaged to offer constitution providers for coastal vessels, and the quantity claimed to be excellent to the corporate between 2007 and 2010 was $1.03 million.
As an alternative of paying the excellent quantity to the corporate, the NNPCL administration unilaterally paid the $1.03 million to a different firm with out proof of a contractual relationship or a Energy of Legal professional indicating the switch of the contracts to a different contractor.
NNPC’s explanations citing indemnity agreements or archival file retrieval have been deemed unsatisfactory.
“The excellent fee of $1.03 million for providers rendered by Messrs Obat Oil and Petroleum Restricted was reconciled and accredited by way of the Downstream DEXCOM approval course of. Proof of the reconciliation and subsequent approval has been offered and is accessible for audit assessment.
“The fee was made to Messrs Progress Maritime Restricted primarily based on an indemnity settlement offered for this transaction. This indemnity settlement ensured authorized and monetary safeguards for NNPC within the occasion of any future disputes. The transaction adhered to Board-approved work processes, and all approvals have been obtained earlier than the disbursement of funds,” the administration stated.
The auditor stated the administration’s response was unsatisfactory, and the findings stay legitimate.
The auditor really useful that $1.03 million be recovered and remitted to the federal government’s treasury.
Irregular variation and inflation of the contract
The auditor additionally flagged $1.93 million in questionable funds for coastal vessel charters by the Nigerian Nationwide Petroleum Firm Restricted (NNPC).
The audit revealed {that a} two-year contract for the time constitution of vessels to move petroleum merchandise to and from PPMC Water Fed Depots was signed on 28 March 2017, and have become efficient from 1 June 2017 to 30 Might 2019, at a every day fee of $19,532.
Nonetheless, after six months, the contractor reported that the MT Breeze Stavenger was unavailable and quickly substituted it with MT Alizea from 1 January 2018, at a better every day fee of $21,643.23. This unilateral improve created a every day variance of $2,111.23, accumulating to $770,598.95 over the 12-month substitution interval.
The auditor famous that no justification was offered for the unavailability of MT Breeze Stavenger, in breach of the unique contract phrases. The entire price of the substitution over 30 months, from January 1, 2018, to Might 31, 2020, was calculated at $1.93 million.
In response to the audit report, the irregular fee exposes the corporate to dangers, together with misapplication and attainable diversion of public funds.
NNPC responded that the transaction was associated to the now-defunct Petroleum Merchandise Advertising and marketing Firm (PPMC), which was wound down as a part of the NNPC restructuring. They added that retrieving detailed data from archived methods would require correct SAP knowledge for verification.
The auditor rejected this clarification, stating that the findings stay legitimate. The NNPC GCEO was requested to justify the irregular fee, get well the $1.93 million, remit it to the Treasury, and supply supporting proof.
Fee of a uncertain excellent quantity
The auditor noticed that $156,000.00 was paid to a Joint Monetary Adviser for the financing of the rehabilitation of PHRC as an impressive fee following his disengagement vide 152nd assembly held on Wednesday, twenty fourth and Thursday, twenty fifth June, 2020.
The auditor famous the quantities weren’t supported with correct computation, reconciliations, or assembly data.
The NNPC administration stated the fee data obtainable embrace particulars of the disengagement course of and the reconciliation performed with the marketing consultant. “Reconciliation was performed as a part of the formal disengagement course of, and the quantities have been settled following established protocols.”
However the response was dominated as unsatisfactory.
The audit requested the GCEO to justify fee to PAC, get well $156,000, remit to the treasury, and supply proof.
Non-Deduction of VAT
The auditor famous {that a} fee of $52,000 to a marketing consultant was made with out deducting VAT ($3,627.91) and WHT ($4,727.27), leading to an overpayment of $8,355.18.
The auditors stated this might lead to misappropriation of funds and lack of authorities income.
In its response, the NNPCL stated the Contract Settlement with Messrs Rothschild & Cie predates the implementation of the 2019 Finance Act, which mandated the inclusion and deduction of VAT and WHT for international distributors. On the time of the contractual settlement and fee, NNPC stated it adhered to the prevailing tax laws.
“Because the implementation of the 2019 Finance Act, NNPC has taken steps to make sure compliance with all up to date tax necessities, together with VAT and WHT deductions for each native and international distributors,” the corporate stated.
However this response was rejected as unsatisfactory, based on the report.
The GCEO was requested to justify non-deduction, remit $8,355.18 VAT and WHT to FIRS, and supply proof.
Delay within the execution of $12.44 million contracts
The audit report additionally famous that the contract for the procurement and set up of 4 diesel turbines at Mosimi Depot was awarded on 5 December 2017, for $12.4 million (break up between USD and NGN quantities).
The contract was not totally executed in 2020, three years after the award, regardless of the settlement specifying that the whole works can be accomplished inside 15 months from the efficient date of the contract graduation, as indicated in Article 6 (6.1).
In its response, the NNPC administration stated the turbines are specialised and fabricated for depot-specific use, which entails complicated engineering and manufacturing processes.
“These should not off-the-shelf objects and require vital lead time for customisation and supply. The worldwide lockdown in the course of the COVID-19 pandemic in 2020 adversely affected manufacturing schedules, transport timelines and contractor mobilisation, additional contributing to mission delays.”
“Extensions to the mission timeline have been necessitated by unexpected delays, together with provide chain disruptions and technical necessities for the fabrication and set up course of.”
The auditor stated this response was unsatisfactory, and findings stay legitimate.
The report requested the GCEO to justify delays to PAC, guarantee completion, and supply proof.
Fee to contractors with out interim fee certificates or invoices
NNPC paid N1.2 billion and $684,323.41 to 13 contractors for varied works achieved at completely different fee milestones in the course of the monetary years 2020 and 2021.
The funds have been made with neither written nor visible interim stories of labor achieved by the contractors, connected as a crucial supporting doc, as required by the
“Whereas the tasks haven’t been bodily verified, there was no proof of existence or development of the contracts for which the sums in (i) above have been paid within the 12 months 2020 and 2021,” the report stated.
The administration stated: “NNPC engineers and mission administration groups are built-in into contract execution processes to make sure steady oversight and high quality assurance. Interim Fee Certificates (IPCs), Job Completion Certificates and supporting documentation are usually submitted and reviewed as a part of the fee approval course of.
Nonetheless, among the tasks referenced are providers. For sure tasks categorised as service-based, bodily or visible, interim stories might not apply. In these circumstances, performance-based documentation, together with invoices, time sheets and work logs, is utilised to validate the milestones achieved earlier than funds are processed.”
Once more, this response was dominated as unsatisfactory, based on the audit.
The GCEO was instructed to justify funds to PAC, get well sums, remit to Treasury, and supply proof.
Previous controversies
Over time, the NNPCL has turn into one of the crucial opaque nationwide oil firms on this planet, as evident in its 43-year historical past of not releasing its audited accounts to the general public till 2020.
Presently, the Financial and Monetary Crimes Fee (EFCC) is investigating 14 NNPCL officers, together with two former chief executives, Mele Kyari and Abubakar Yar’Adua, over an alleged $2.7 billion fraud within the upkeep and rehabilitation of the Kaduna, Warri and Port Harcourt refineries.
The three refineries have constantly underperformed, recording zero manufacturing for a few years, regardless of receiving annual allocations of funds and incurring billions of naira in turnaround upkeep bills.
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Additionally, since June, the Senate Committee on Public Accounts has been probing the corporate over N210 trillion allegedly unaccounted for in its audited monetary statements between 2017 and 2023. The administration was summoned 4 instances to elucidate the inaccuracies, however solely despatched a written clarification final week.
The Auditor‑Common’s 2021 report additionally flagged the NNPC for unauthorised deductions and diversion of N514 billion.
In an editorial printed this week, PREMIUM TIMES urged the state oil firm NNPC to return the lacking funds. “No financial system survives amid such doubtful fiscal exertion on the treasury,” the editorial learn.
