- Wants Mele Kyari Sanctioned for Gross Misconduct
By Kolawole Ojebisi
Reports from the Nigerian Office of Auditor-General for the Federation (OAGF) have alleged that at least four major financial infractions amounting to N514bn were uncovered in the operations of the Nigerian National Petroleum Company Limited for the financial year ending December 31, 2021.
Breaking down the alleged infractions, the reports showed irregular deductions worth N343.64bn from domestic crude sales at source, warehousing of N83.66bn from the federation’s miscellaneous income in a sinking fund account, unauthorised deductions of N82.95bn from the federation revenue for refinery rehabilitation and the unsubstantiated payment of N3.75bn shortfalls from the sale of petrol.
To address these concerns, the report recommends that the Group Chief Executive Officer of the NNPCL, Mr Mele Kyari be either sanctioned or made to give a comprehensive accountability report on the alleged infractions to the Public Accounts Committee of the National Assembly.
These alleged infractions which were raised in the 2021 audit report of non-compliance/internal control weaknesses in the MDAs for the 2021 financial year.
It said the issues violated the Constitution of the Federal Republic of Nigeria and the 2009 Act of Financial Regulations.
The report stated that NNPCL didn’t provide any response or justification for the reported infractions raised by the auditor general.
Analysing the issues, the auditor-general stated that a review of NNPC SAP payment records from March to May 2021 showed that N484.73bn was generated from the sales of 18,966,095 barrels of crude oil but N343.64bn was deducted as operational costs.
It said the company didn’t provide a breakdown of the costs, violating section 162 (1) which states that, “The federation shall maintain a special account to be called the federation account into which all revenue collected by government”.
The report read in part: “Audit observed from the review of NNPC SAP payment record for March and May 2021 payments that: The sum of N484.73bn was the gross amount generated for sale of Domestic Crude for the Months of March and May 2021.
“The sum of N343.64bn from the gross amount was unilaterally deducted from the gross domestic crude sales as NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil and Products Pipeline Losses, as well as the pipelines maintenance and management costs.
“The details of each of the cost components deducted were not provided for audit review. Hence, reasons for the deductions could not be justified by the Management.
“In the month of May, the net payable which could have been remitted ought to have been N127.075bn but only the sum of N77.075bn was remitted, leaving an unremitted balance of N50bn to the Federation Account which has remained unaccounted for.
“The above anomalies could be attributed to weaknesses in the internal control system at NNPC, now NNPC Ltd. This is a potential loss of Federation Revenue, diversion of public funds, or misapplication or misappropriation of funds.”
Another issue raised was the deduction of N82.95bn from the sale of Crude Oil and Gas (Federation Revenue) from the 2020 and 2021 records and for purported Refineries Rehabilitation without evidence of authorisation and approvals before the deductions were made.
“Audit observed from the review of NNPC Payment records for the period 2020 and 2021 that the sum of N82.95bn was deducted from the sale of Crude Oil and Gas (Federation Revenue) from the 2020 and 2021 records.
“This amount deducted at source for purported Refineries Rehabilitation was not supported with evidence of authorization and approvals before the deductions were made.
“The above anomalies could be attributed to weaknesses in the internal control system at NNPC, now NNPC Ltd,” it noted.
Similarly, the auditor-general reported that the national oil firm didn’t report N3.75bn as a shortfall from the sales of petrol sales.
“Audit observed that the sum of N3.75bn was paid to a Company as a shortfall on sales of MT cargo of PMS
“Paragraphs 2 and 3 of the PPMC internal memo with ref. No. PPMC/ EDSS/BILLING/19.16 dated 9/08/2021 advised Marketers to pay naira sales proceeds in advance into the company’s designated accounts, which the company utilised the sum of N3.75bn to purchase forex through NNPC Group treasury to pay the suppliers, and details of the transaction between the NNPC, PPMC and the company that gave rise to the sum of N3.75bn which was paid to the company as shortfall on sales of MT cargo of PMS were not availed for audit.
“The above anomalies could be attributed to weaknesses in the internal control system at the NNPC.”
Also, the audit observed that the sum of N83.66bn, being miscellaneous income from the NNPC joint venture operations from the year 2016 to 2020, was sunk into the CBN/NNPC sinking fund account instead of the Federation Account.
“Warehousing of the miscellaneous income of 2016 to 2020 meant for the Federation Account into the CBN/NNPC Sinking Fund Account led the Federation to resort to borrowings,” the report noted.
The report further recommended that the NNPCL Group Chief Executive Officer should be requested to furnish reasons for the spending to the Public Accounts Committees of the National Assembly or face sanctions relating to irregular payment and gross misconduct specified in paragraphs 3106, 3112, 3115, and 3129 of the Financial Regulations 2009.
Within this period, the Federal Government recorded a revenue shortfall of N2tn as revenue projection stood at N6.64tn while actual revenue was N4.64tn.
