A recent report by Nigeria’s Auditor-General, released in November 2024, has drawn significant public attention for alleging financial misappropriation by the Nigerian National Petroleum Company Limited (NNPCL) during the 2021 fiscal year. The 558-page document highlights claim of unauthorized deductions and revenue diversions amounting to billions of naira. However, a deeper analysis reveals that many of the issues raised in the report precede the current management’s tenure and overlook significant reforms implemented by the NNPCL leadership in recent years. This article seeks to provide context to the report, highlighting the progress achieved under NNPCL’s current leadership and why the timing of the report’s release raises questions about the underlying motives behind it.
Legacy Issues and Progress Under Current NNPCL Leadership
The audit report details several financial discrepancies, including unauthorized deductions for refinery rehabilitation and improper management of funds. However, it is important to note that most of these alleged infractions occurred between 2016 and 2020, long before the Petroleum Industry Act (PIA) transformed the NNPC into a commercially driven entity in July 2022.
Since the appointment of Mele Kyari as the Group Chief Executive Officer (GCEO) in July 2019, NNPCL has embarked on a transformative journey toward transparency and accountability. The company’s leadership inherited a culture of financial opacity and inefficiency, which the ongoing reforms have sought to address.
For instance, the alleged ₦82.9 billion deduction for refinery rehabilitation was part of a broader initiative to revamp Nigeria’s refineries, particularly the Port Harcourt and Warri refineries, which had been neglected for decades. These funds were reinvested into national assets to reduce Nigeria’s dependence on imported petroleum products and save foreign exchange.
Under the current leadership, the Port Harcourt and Warri refineries have resumed operations, processing tens of thousands of barrels of crude oil daily, demonstrating the tangible results of these investments. These achievements are a testament to the ongoing efforts to improve Nigeria’s energy sector and should not be overshadowed by past governance issues.
Significant Reforms Under the Petroleum Industry Act (PIA)
The passage of the PIA in 2021 was a game-changer for Nigeria’s oil and gas sector. It transitioned the NNPC from a government-run institution to a limited liability company, NNPCL, with a clear mandate to operate as a commercially driven entity.
This transformation has brought about greater transparency, accountability, and operational efficiency. NNPCL now regularly publishes its audited financial statements and operational reports, demonstrating its commitment to transparency. The company has also become a member of the Extractive Industries Transparency Initiative (EITI), ensuring compliance with international transparency standards.
These reforms have improved governance, reduced political interference, and strengthened internal control systems. The new NNPCL Board, inaugurated in December 2023 by President Bola Ahmed Tinubu, further underscores the government’s commitment to enhancing oversight and accountability in the oil and gas sector.
Questionable Timing of the Auditor-General’s Report
The timing of the Auditor-General’s report raises concerns, especially as it coincides with significant achievements under the current NNPCL management. The report was released shortly after the successful revitalization of the Port Harcourt and Warri refineries and increased crude oil production, which have positively impacted Nigeria’s economy.
Some critics argue that the report may be politically motivated, aiming to undermine the ongoing reforms and discredit NNPCL’s leadership. The progress achieved under Mele Kyari’s administration — including reducing oil theft, addressing pipeline vandalism, and increasing transparency — contradicts the narrative of mismanagement portrayed in the report.
These developments suggest that the report could be an attempt to distract from the successes recorded by NNPCL and destabilize the company’s leadership at a time when Nigeria is making strides toward energy independence and economic stability.
Addressing Legacy Issues and Strengthening Accountability
It is important to distinguish between legacy issues inherited by the current NNPCL management and ongoing efforts to address them. The alleged financial discrepancies in the audit report highlight longstanding governance challenges that predate the reforms introduced under the PIA.
Since the company’s restructuring, NNPCL has taken proactive steps to improve internal controls, prevent future discrepancies, and enhance operational efficiency. Key measures include:
Publishing audited financial statements to improve transparency.
Implementing cost-cutting measures to enhance profitability.
Restructuring contracts to reduce costs and improve revenue generation.
Improving reporting mechanisms to comply with international transparency standards.
These measures collectively aim to foster a culture of accountability within NNPCL, ensuring that the company operates efficiently and transparently in the best interest of the Nigerian people.
Conclusion
The recent Auditor-General’s report on NNPCL raises important questions about financial governance in Nigeria’s oil and gas sector. However, it is essential to contextualize the report and recognize the significant progress made under the current NNPCL leadership.
While accountability is crucial, it should be pursued with a clear understanding of the reforms and challenges faced by NNPCL’s management. Misleading narratives that seek to tarnish the image of reform-minded leaders risk undermining the progress being made in one of Nigeria’s most critical sectors.
Rather than focusing on past mismanagement, stakeholders should support the ongoing reforms aimed at ensuring transparency, accountability, and sustainable growth in Nigeria’s energy sector. The National Assembly’s Public Accounts Committees should engage constructively with NNPCL to address legacy issues while acknowledging the strides made under the current leadership.
The future of Nigeria’s oil and gas industry depends on continued reforms, responsible leadership, and a collective commitment to fostering transparency and accountability. The achievements recorded by NNPCL under Mele Kyari’s administration and guidance of the NNPCL Board should be celebrated, not overshadowed by legacy issues that are being actively addressed.
Prof. U. A. Danbatta is the Director of the NNPCL-funded Centre for Inland Basins Studies (CIBS), Ahmadu Bello University, Zaria (10-01-2025).
