In its 2021 Oil & Gas Industry Report, the Nigerian Extractive Industry Transparency Initiative (NEITI) has revealed significant financial irregularities within the Nigerian National Petroleum Company Limited (NNPCL) and the oil sector at large. Despite the borrowing spree of the Muhammadu Buhari administration and decreasing oil sector revenues, NNPCL failed to remit $6.923 billion and conducted a crude swap of approximately $7.108 billion under its Direct Sale Direct Purchase (DSDP) scheme in 2021.*
As of July 31, 2023, outstanding taxes payable to the Federal Inland Revenue Service amounted to $13.591 million, while the total outstanding federation revenue payable to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) as of December 31, 2022, stood at $8.251 billion. NNPCL and its exploration and production subsidiary were responsible for over 70 percent of these liabilities.*
Despite substantial subsidies for Premium Motor Spirit (PMS), approximately 47 other oil companies collectively failed to pay $1.342 billion to the government.*
NEITI’s report encompassed the activities of more than 69 companies, with 22 of them meeting criteria for reconciliation. These 22 companies represented 95.65 percent of the total payments by companies, amounting to $11,332,792.48.*
The report also highlighted deductions made by NNPCL from the Domestic Crude Account before remittance to the federation in 2021, totaling N751.11 billion ($1.94 billion). However, this amount was not due for payment as of December 2021. Additionally, an outstanding liability of N334.87 billion ($871.15 million) existed as of December 2021.*
The report indicated that N1.20 trillion ($3.15 billion) was deducted from domestic sales proceeds as subsidy, while crude and product losses amounted to N16.20 billion. Pipeline repairs and maintenance costs reached N22.05 billion, with strategic stock holding expenses totaling N6.15 billion.*
NEITI has called for a thorough investigation into NNPCL and the Nigerian Petroleum Development Company (NPDC). The organization has urged other companies to promptly settle outstanding liabilities, while government agencies should intensify efforts to recover debts.*
Additionally, NEITI expressed concern about the provision in Section 64 (m) of the Petroleum Industry Act (PIA), which designates NNPCL as the supplier of last resort with associated costs borne by the federation. NEITI warns that this provision is susceptible to misinterpretation, as seen during the previous practice of deducting from revenue sources.*
