NNPCL under fire for N684m expenditure in irregular contracts

The Nigerian National Petroleum Company Limited (NNPCL) has been indicted for questionable expenditures totaling about N684 million on abandoned projects, unexecuted contracts, and irregular procurements, according to the 2022 Auditor-General’s annual report.

The 808-page report, recently submitted to the National Assembly, exposes systemic weaknesses in the state-owned oil company’s financial controls and highlights a troubling pattern of payments for work that was never completed.

The audit reveals that NNPCL made several payments without evidence of project execution, renewed contracts irregularly, and failed to enforce financial regulations designed to protect public funds.

In some cases, contractors received full payments despite failing to deliver the agreed work.

These practices violate the Nigerian Constitution and Financial Regulations (FR) 3104 and 3106 (2009), which require recovery of mobilization fees from non-performing contractors and referral of offenders to the Economic and Financial Crimes Commission (EFCC) for prosecution.

A major concern highlighted by the audit is a N533 million contract awarded in May 2020 for the construction of an Accident and Emergency Facility along Airport Road, Abuja.

By September 2020, NNPCL had released N292 million covering the first three project milestones, including detailed engineering drawings, mobilization, and substructure works.

However, auditors visiting the site in December 2022 found the project abandoned, with none of the listed components, including medical wards, mortuary, physiotherapy center, or external works, completed.

Auditors recommended that the GCEO recover the funds and remit them to the government treasury.

The audit also identified irregularities in a N246 million contract for 2,400 metres of seamless carbon steel pipe for the Warri Refinery and Petrochemical Company.

Only 1,908 metres had been delivered by the time of the audit, yet full payment had been made. NNPCL cited COVID-19-related supply chain disruptions and presented a Goods Receipt Note as evidence of delivery, but auditors rejected this explanation, emphasizing that payment for undelivered goods violates financial regulations and called for recovery of the funds.

Additionally, NNPCL paid N152 million for a procurement allegedly requested by the Office of the Inspector-General of Police, but auditors found no supporting documentation or certificates of completion, describing the transaction as irregular and in violation of a 2008 Establishment Circular.

Recovery of the payment was recommended, with sanctions applicable if compliance is not demonstrated.

The report attributes these lapses to weak internal controls and opaque financial practices within NNPCL, warning of the risks of diversion of public funds and payment for unexecuted contracts.

The findings come amid ongoing EFCC investigations into 14 NNPCL officials, including former chief executives Mele Kyari and Abubakar Yar’Adua, over an alleged $2.7 billion fraud in refinery maintenance.

The Senate Committee on Public Accounts is also probing NNPCL over N210 trillion in allegedly unaccounted funds from 2017 to 2023.

These revelations reinforce earlier concerns, including the 2021 Auditor-General’s report that flagged NNPCL for unauthorised deductions totaling N514 billion.

Experts and media commentators continue to urge the company to recover missing funds and implement urgent corrective actions to safeguard public resources.