Nigeria’s state-owned energy firm, Nigerian National Petroleum Company Limited (NNPCL), has been heavily criticized in a recent government audit report that details widespread financial irregularities and waste, including contracts valued at over N684 million, according to PT
The comprehensive audit, covering the company’s operations, highlighted significant breaches of procurement procedures and management oversight, ultimately leading to the abandonment of several publicly funded projects.
According to the report’s findings, the NNPCL was specifically indicted for awarding numerous contracts without following due process, leading to the classification of those transactions as “irregular.” Furthermore, the document revealed instances where substantial funds were expended on projects that were later stalled or completely abandoned, representing a major loss to the public treasury.
N292 million paid for abandoned project
One major indictment concerns a N533 million contract awarded in May 2020 for the construction of an Accident and Emergency Facility along Airport Road, Abuja.
The contract, jointly overseen by the then NNPC and the State Security Service, was expected to be completed within six months.
However, by September 2020, the company had already released N292 million, covering the first three project milestones, including detailed engineering drawings, mobilisation, and completion of substructure works.
However, when auditors visited the site on 2 December 2022, they found it to be abandoned. None of the listed components, including the Accident and Emergency Centre, medical wards, mortuary, physiotherapy centre, and external works, had been executed.
The auditors noted that the payment violated Financial Regulations 3104 and 3106 (2009), which require recovery of mobilisation fees from non-performing contractors and referral of offenders to the EFCC.
Auditors attributed the lapses to weaknesses in the company’s internal control systems and noted the risk of payment for work not done, loss of government funds, and diversion of public resources.
In response, NNPCL requested the SAP payment number for the disbursed funds, arguing that verification within their system was impossible without it.
The auditors, however, deemed the response unsatisfactory, maintaining that the findings remain valid until corrective action is implemented.
The report recommended that the Group Chief Executive Officer (GCEO) recover the N292 million from the contractor, remit it to the government treasury, and provide evidence of remittance to the Public Accounts Committees (PAC) of the National Assembly. The GCEO at the time the infractions occurred was Mele Kyari, who was removed earlier this year and replaced by Bayo Ojulari.
N246 million paid without evidence of supplying materials
The audit also found that N246 million was paid to another contractor for the purchase and supply of 2,400 metres of seamless carbon steel pipe to the Warri Refinery and Petrochemical Company (WRPC).
The contract was extended from 31 October 2019 to 30 June 2020 due to the delivery of incorrectly specified pipes, which were reportedly rejected by NNPCL.
By the time of the audit in December 2022, only 1,908 metres had been delivered.
The outstanding 492 metres had not been supplied, yet the contractor had received full payment. Auditors said this violated FR 708 (2009), which prohibits payment for goods or services not rendered, as well as FR 603(i) and 415, which mandate detailed documentation and due economy in expenditure.
NNPCL argued that the delays were due to global supply chain disruptions caused by the COVID-19 pandemic, which impacted production and delivery timelines.
The company also cited a Goods Receipt Note dated 20 October 2020 as evidence of delivery.
Auditors rejected the justification, saying it was inadequate, and the findings remain valid until the recommendations are implemented.
The report instructed the GCEO to recover the N246 million, remit it to the treasury, and justify the expenditure to PAC. Sanctions for irregular payments and non-executed contracts under FR 3104(ii), 3106, and 3115 would apply if compliance is not demonstrated.
N152 million irregular procurement for the Nigeria Police
The audit also flagged a N152 million payment made by NNPCL to a contractor for a procurement allegedly requested by the Office of the Inspector-General of Police.
Auditors reported that neither the details of the procurement nor the certificates of completion were provided. They added that the transaction violated a 2008 Establishment Circular, which forbids ministries and agencies from soliciting or accepting financial support from parastatals under their supervision.
The auditors faulted NNPCL’s claim that it required a SAP reference number to trace the transaction. They said the response did not address the core issue of irregular procurement and lacked documentary evidence.
The report recommended the recovery and remittance of the N152 million, warning that sanctions for irregular payments and unexecuted work, as stipulated in Financial Regulations 3106 and 3104, may apply.
Overall, the Auditor-General attributed the irregularities to weak internal controls within NNPCL, exposing the government to potential financial losses, payments for unexecuted contracts, and diversion of public funds.
The report emphasises the need for urgent corrective actions and full compliance with financial regulations to safeguard public resources.
