NNPC’s enduring opacity

THE Public Accounts Committee of the House of Representatives is probing officials of the Nigerian National Petroleum Company Limited (NNPCL) and the Independent National Electoral Commission (INEC) over alleged financial breaches totalling more than N802.19bn. The allegations, contained in the Auditor-General for the Federation’s reports covering the 2021, 2022 and 2023 financial years, raise grave queries over procurement procedures, revenue management, payments and compliance with financial regulations. Of this sum, N514bn is queried against NNPCL and N288.19bn against INEC. These are not mere accounting discrepancies; they are symptoms of a deeper malaise that has crippled Nigeria’s most strategically important institution for generations.

The specific allegations against NNPCL are damning. They include irregular deductions of N343.64bn from domestic crude oil sales, N83.66bn allegedly warehoused from miscellaneous revenue in a sinking fund account, N82.95bn in unauthorised deductions from Federation revenue and a further N3.75bn shortfall arising from the sale of petroleum products. That such queries recur across three consecutive audit cycles is itself an indictment of the company’s management and the entire oversight architecture that permits impunity to flourish unchecked. By any honest assessment, NNPCL has historically been a cesspool of corruption and arguably the most opaque oil organisation in the world. This opacity is no accident. It is the deliberate product of a governance arrangement in which successive presidents, from Olusegun Obasanjo to

Muhammadu Buhari and now Bola Tinubu chose to appoint themselves Ministers of Petroleum. That decision concentrated enormous discretionary power over the nation’s principal revenue source in a single office, shielding the company from meaningful scrutiny and embedding political control at the heart of its operations. When the referee is also the player, accountability becomes impossible.

The consequences are stark. Even after several governments and repeated scandals, including those that forced successive leaderships to resign, the situation in NNPCL remains fundamentally unchanged. The company has been comatose for more than two decades. There has been no meaningful knowledge transfer, no institutional memory, and no culture of continuous improvement.

Each new management cycle begins anew, learning nothing and forgetting everything, while the underlying structures of dysfunction remain untouched. The appropriate comparison is with

Saudi’s Aramco. Both companies publish audited financial information, but the similarities end there. Aramco operates within a mature corporate and investor-reporting framework, underpinned by its stock-market listing, detailed financial statements, governance disclosures and regular results reporting. NNPCL has improved since the Petroleum Industry Act, and Nigeria’s NEITI/EITI framework provides unusually detailed information on oil cargoes, quantities and prices. But NNPCL still faces far greater scrutiny over oil-sale contracts, deductions, government revenue remittances and its financial relationship with the Nigerian State. Aramco’s disclosure is institutional; NNPCL’s remains dependent on external oversight mechanisms that are themselves under-resourced and politically constrained.

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On any credible index of opacity, NNPCL ranks among the worst. It has broken a 43-year streak by publishing audited financial records and rising out of the Resource Governance Index’s “failing” tier. But its real-world operations remain deeply opaque. Multi-billion-dollar off-budget resource-backed loans, unmapped fuel subsidy allocations and a complete lack of transparency over major capital decisions betray a company that answers to no one. There are serious allegations of sharp practices involving staff, communities around oil wells, and production facilities and other interests operating within the sector.

Even more disturbing are the allegations concerning the companies contracted to protect the country’s pipelines. There are claims that elements entrusted with safeguarding these critical national assets may themselves be benefiting from the leakages they are supposed to prevent. Allegations have equally been made about the complicity of personnel within the security architecture, including elements of the Nigerian Army and

Nigerian Navy. These are grave matters that demand thorough investigation and, where wrongdoing is established, firm prosecution. Nigeria cannot continue losing enormous resources while those entrusted with protecting its oil infrastructure are alleged to be part of the problem.

The reform needed is specific and urgent. One path is to expose NNPC to greater private-sector discipline. If a substantial part of the company were listed on the stock market and professionally run, with the Federal Government retaining perhaps 30 percent equity, the waste, interference and sharp practices could be reduced considerably. Private investors would demand accountability, transparency and returns on their investments. They would scrutinise expenditure and insist that leakages are plugged. The unfortunate attitude that treats public assets as belonging to nobody, where responsibility for failure is easily passed around, becomes much more difficult to sustain when private capital is involved and management must account to shareholders. The noose around waste, inefficiency and corruption becomes considerably tighter.

However, structural reform alone will not suffice. The kind of transformation required will never take place while political appointments are based on prebendalism, a system in which state resources are distributed to political loyalists as rewards for support. As long as competence is subordinated to patronage, NNPCL will remain a vehicle for political extraction rather than national development. The issue is not merely whether government owns NNPCL, but whether those managing it know that every naira lost, wasted or diverted will be questioned and accounted for. That is the discipline Nigeria’s oil industry desperately needs. Until it is imposed through privatisation, professional management, market discipline and insulation from political interference, the audits will keep coming, the queries will keep mounting and the nation will keep losing. The time for half-measures is long past.