The Nigerian National Petroleum Company Limited (NNPC) faces fresh scrutiny as the Auditor-General’s new report accuses the state oil firm of fund misappropriation, inflated contracts, irregular payments and failure to deduct statutory taxes.
The anomalies, which occurred between 2020 and 2021, involve over $51 million in questionable settlements.
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The 808-page report, published in September 2025 and recently submitted to the National Assembly, details systemic violations of financial regulations, weak internal controls, and unexplained payments made under controversial contracts.
In one instance, the audit revealed that NNPC failed to deduct the statutory 1 per cent Stamp Duty on payments totalling N24.7 billion and $52.98 million to contractors and service providers. This amounts to unpaid taxes of N247 million and $529,863.
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The audit noted that this contravenes Treasury Circulars and Financial Regulations, which mandate accounting officers to deduct and remit Stamp Duty, Value Added Tax (VAT), and Withholding Tax (WHT) to the Federal Inland Revenue Service (FIRS).
The report warned that such lapses create risks of overpayment to contractors, diversion of funds, and loss of government revenue.
NNPC management told the auditor that it is engaging the FIRS to determine applicability and compliance requirements for the deductions. However, the auditor deemed the response unsatisfactory. Consequently, the findings remain valid until recommendations are implemented.
The auditor directed the Group Chief Executive Officer (GCEO) to account for the unpaid taxes, recover and remit the sums to the Treasury, and provide evidence to the Public Accounts Committees (PAC) of the National Assembly.
The GCEO at the time of the infractions was Mele Kyari, who assumed office in 2019 and remained in office until he was removed earlier this year and replaced by Bayo Ojulari.
In another query, the report also flagged $22.84 million paid to a contractor for 2017/2018 Direct Sales Direct Payment (DSDP) contracts. While crude oil and petroleum products were supplied, reconciliations indicated that amounts owed to NNPC were far below what was paid.
In its response to the auditor, NNPCL stated that the Crude Oil Marketing Division (COMD), which managed the DSDP contracts during the period, no longer exists.
“As part of the transition to NNPC Ltd., several changes in structure and operations have occurred, leading to challenges in retrieving records related to this transaction due to insufficient information. Kindly provide the SAP Number, and we will retrieve all required documents,” the state oil firm said.
The auditor said this response was unsatisfactory, leaving the irregular payment unresolved.
The auditor also instructed the GCEO to recover and remit $22.84 million to the government treasury.
In all cases, the audit highlighted weak internal controls, poor documentation, and potential diversion of public funds.
The NNPC management responded to all the issues, but they were consistently judged unsatisfactory by auditors.
The report called on the NNPC chief to justify all irregular payments to the Public Account Committee of the National Assembly, recover misapplied funds, remit them to the treasury, and comply with the Financial Regulations of 2009.
Unauthorised Contract Renewals
The audit observed that the Chief Operating Officer (COO) Downstream of the NNPCL single-handedly renewed a contract for Charter Hire of Coastal Vessel and provision of MT Barwasa on emergency grounds for one year (1 May 2020 – 30 April 2021).
Payments of $1.8 million were made for nine months before official approval, the report said.
NNPC cited the COVID-19 lockdown as justification for anticipatory renewal to maintain operations, but the auditor deemed the explanation unsatisfactory.
The report noted that such anomalies risk government payments without a contractual basis and potential compromise of funds, reflecting weaknesses in NNPC Ltd’s internal control system.
Provisional payments without supporting documents
The audit also highlighted payments of $2.01 million and N478.5 million for the Atlas Cove Depot Optimisation Project without invoices or receipts.
NNPCL claimed that the provided references were insufficient for tracing the transaction. “The SAP document reference 15000076 dated 4 March 2021 does not accurately match the corresponding transaction. To enable comprehensive verification, we request that the audit team provide the correct SAP details,” the management said.
The auditor, however, insisted that the payments were irregular and instructed the GCEO to recover and remit $2.01 million and N478.5 million to the Treasury and report to PAC.
$8.2 million paid for the emergency installation of custody transfer metres
NNPC awarded a contract on 28 June 2019, for emergency procurement and installation of custody transfer metres on crude and product pipelines at eleven locations for $8.21 million.
After milestone payments and a 2 per cent discount on the outstanding balance, the revised contract price became $8.23 million.
The auditor noted that the first and second batches of meters were delivered to the Port Harcourt office, rather than the specified locations, violating contract provisions.
In its response, NNPC management said SAP details provided by the audit were insufficient to trace the transactions and supporting documents. They requested that the audit team provide the correct SAP details to facilitate review.
But the audit said their response was unsatisfactory, and the findings remain valid.
The GCEO was instructed to recover $8.2 million and remit the same to the Treasury, and provide proof to the Public Account Committee of the National Assembly.
Payment for legacy debt
The audit observed that a company was engaged to provide charter services for coastal vessels, and the amount claimed to be outstanding to the company between 2007 and 2010 was $1.03 million.
Instead of paying the outstanding amount to the company, the NNPCL management unilaterally paid the $1.03 million to another company without evidence of a contractual relationship or a Power of Attorney indicating the transfer of the contracts to another contractor.
NNPC’s explanations citing indemnity agreements or archival record retrieval were deemed unsatisfactory.
“The outstanding payment of $1.03 million for services rendered by Messrs Obat Oil and Petroleum Limited was reconciled and approved through the Downstream DEXCOM approval process. Evidence of the reconciliation and subsequent approval has been provided and is available for audit review.
“The payment was made to Messrs Progress Maritime Limited based on an indemnity agreement provided for this transaction. This indemnity agreement ensured legal and financial safeguards for NNPC in the event of any future disputes. The transaction adhered to Board-approved work processes, and all approvals were obtained before the disbursement of funds,” the management said.
The auditor said the management’s response was unsatisfactory, and the findings remain valid.
The auditor recommended that $1.03 million be recovered and remitted to the government’s treasury.
Irregular variation and inflation of the contract
The auditor also flagged $1.93 million in questionable payments for coastal vessel charters by the Nigerian National Petroleum Company Limited (NNPC).
The audit revealed that a two-year contract for the time charter of vessels to transport petroleum products to and from PPMC Water Fed Depots was signed on 28 March 2017, and became effective from 1 June 2017 to 30 May 2019, at a daily rate of $19,532.
However, after six months, the contractor reported that the MT Breeze Stavenger was unavailable and temporarily substituted it with MT Alizea from 1 January 2018, at a higher daily rate of $21,643.23. This unilateral increase created a daily variance of $2,111.23, accumulating to $770,598.95 over the 12-month substitution period.
The auditor noted that no justification was provided for the unavailability of MT Breeze Stavenger, in breach of the original contract terms. The total cost of the substitution over 30 months, from January 1, 2018, to May 31, 2020, was calculated at $1.93 million.
According to the audit report, the irregular payment exposes the company to risks, including misapplication and possible diversion of public funds.
NNPC responded that the transaction was related to the now-defunct Petroleum Products Marketing Company (PPMC), which was wound down as part of the NNPC restructuring. They added that retrieving detailed records from archived systems would require accurate SAP data for verification.
The auditor rejected this explanation, stating that the findings remain valid. The NNPC GCEO was asked to justify the irregular payment, recover the $1.93 million, remit it to the Treasury, and provide supporting evidence.
Payment of a doubtful outstanding amount
The auditor observed that $156,000.00 was paid to a Joint Financial Adviser for the financing of the rehabilitation of PHRC as an outstanding payment following his disengagement vide 152nd meeting held on Wednesday, 24th and Thursday, 25th June, 2020.
The auditor noted the amounts were not supported with proper computation, reconciliations, or meeting records.
The NNPC management said the payment records available include details of the disengagement process and the reconciliation conducted with the consultant. “Reconciliation was conducted as part of the formal disengagement process, and the amounts were settled following established protocols.”
But the response was ruled as unsatisfactory.
The audit asked the GCEO to justify payment to PAC, recover $156,000, remit to the treasury, and provide proof.
Non-Deduction of VAT
The auditor noted that a payment of $52,000 to a consultant was made without deducting VAT ($3,627.91) and WHT ($4,727.27), resulting in an overpayment of $8,355.18.
The auditors said this could result in misappropriation of funds and loss of government revenue.
In its response, the NNPCL said the Contract Agreement with Messrs Rothschild & Cie predates the implementation of the 2019 Finance Act, which mandated the inclusion and deduction of VAT and WHT for foreign vendors. At the time of the contractual agreement and payment, NNPC said it adhered to the prevailing tax regulations.
“Since the implementation of the 2019 Finance Act, NNPC has taken steps to ensure compliance with all updated tax requirements, including VAT and WHT deductions for both local and foreign vendors,” the company said.
But this response was rejected as unsatisfactory, according to the report.
The GCEO was asked to justify non-deduction, remit $8,355.18 VAT and WHT to FIRS, and provide proof.
Delay in the execution of $12.44 million contracts
The audit report also noted that the contract for the procurement and installation of four diesel generators at Mosimi Depot was awarded on 5 December 2017, for $12.4 million (split between USD and NGN amounts).
The contract was not fully executed in 2020, three years after the award, despite the agreement specifying that the entire works would be completed within 15 months from the effective date of the contract commencement, as indicated in Article 6 (6.1).
In its response, the NNPC management said the generators are specialised and fabricated for depot-specific use, which involves complex engineering and manufacturing processes.
“These are not off-the-shelf items and require significant lead time for customisation and delivery. The global lockdown during the COVID-19 pandemic in 2020 adversely affected manufacturing schedules, shipping timelines and contractor mobilisation, further contributing to project delays.”
“Extensions to the project timeline were necessitated by unforeseen delays, including supply chain disruptions and technical requirements for the fabrication and installation process.”
The auditor said this response was unsatisfactory, and findings remain valid.
The report asked the GCEO to justify delays to PAC, ensure completion, and provide evidence.
Payment to contractors without interim payment certificates or invoices
NNPC paid N1.2 billion and $684,323.41 to 13 contractors for various works done at different payment milestones during the financial years 2020 and 2021.
The payments were made with neither written nor visual interim reports of work done by the contractors, attached as a necessary supporting document, as required by the
“While the projects have not been physically verified, there was no evidence of existence or progression of the contracts for which the sums in (i) above were paid in the year 2020 and 2021,” the report said.
The management said: “NNPC engineers and project management teams are integrated into contract execution processes to ensure continuous oversight and quality assurance. Interim Payment Certificates (IPCs), Job Completion Certificates and supporting documentation are generally submitted and reviewed as part of the payment approval process.
However, some of the projects referenced are services. For certain projects categorised as service-based, physical or visual, interim reports may not apply. In these cases, performance-based documentation, including invoices, time sheets and work logs, is utilised to validate the milestones achieved before payments are processed.”
Again, this response was ruled as unsatisfactory, according to the audit.
The GCEO was instructed to justify payments to PAC, recover sums, remit to Treasury, and provide evidence.
Past controversies
Over the years, the NNPCL has become one of the most opaque national oil companies in the world, as evident in its 43-year history of not releasing its audited accounts to the public until 2020.
Presently, the Economic and Financial Crimes Commission (EFCC) is investigating 14 NNPCL officials, including two former chief executives, Mele Kyari and Abubakar Yar’Adua, over an alleged $2.7 billion fraud in the maintenance and rehabilitation of the Kaduna, Warri and Port Harcourt refineries.
The three refineries have consistently underperformed, recording zero production for many years, despite receiving annual allocations of funds and incurring billions of naira in turnaround maintenance expenses.
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Also, since June, the Senate Committee on Public Accounts has been probing the company over N210 trillion allegedly unaccounted for in its audited financial statements between 2017 and 2023. The management was summoned four times to explain the inaccuracies, but only sent a written explanation last week.
The Auditor‑General’s 2021 report also flagged the NNPC for unauthorised deductions and diversion of N514 billion.
In an editorial published this week, PREMIUM TIMES urged the state oil company NNPC to return the missing funds. “No economy survives amid such dubious fiscal exertion on the treasury,” the editorial read.
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