- Introduction
The recent publication titled “Revenue Controversy: NNPCL Withholds N13.7tn from Federation Account, FAAC Report Reveals” published on 21 February 2025 by Austin Ojobo raises serious concerns that require a more balanced and factual response. It highlights several misconceptions and overlooks facts about the recent reforms of the Nigerian National Petroleum Company Limited (NNPC Limited).
While transparency and accountability in public institutions are essential, it is equally important that discussions around the NNPC Limited be rooted in historical context, accurate financial analysis, and an objective understanding of recent significant reforms implemented by the NNPCL leadership in recent years.
These have introduced transparency through board oversight led by experienced individuals like Chief Pius Akinyelure, who first appointed to the NNPC Board in 2016 and later became the Chairman of NNPC Limited under President Bola Tinubu’s administration. The above points should be highlighted and acknowledged alongside any criticisms, to provide a balanced perspective on NNPC’s progress and challenges. This rejoinder seeks to provide context to the said article by Mr. Austin after a deeper analysis of it.
- Legacy Issues Predating the NNPC Limited Era
The alleged financial discrepancies raised in the report span the period between 2012 and 2024. It is crucial to highlight that for most of this period, NNPC operated as a corporation, not a Limited Liability Company, meaning its operations were subject to government control, government policy directives, bureaucratic inefficiencies, and policy inconsistencies. Historical financial gaps and legal ambiguities in the Constitution and NNPC Act enable such withholdings of unremitted funds from crude oil sales and many other issues when NNPC was a corporation.
Mele Kyari was appointed as Group Managing Director (GMD) in July 2019, and under his leadership, the Petroleum Industry Act (PIA) was signed into law in August 2021, officially transforming NNPC into a commercially driven entity—NNPC Limited. Prior to the enactment of the Petroleum Industry Act (PIA) in 2021, NNPC was not a fully commercial entity and had obligations such as subsidy payments, pipeline maintenance, operational costs, and joint venture (JV) cash calls, often outside formal budget processes, which affected its remittance capabilities.
Therefore, attributing the financial shortfalls accumulated over 12 years to the current leadership, which has only been in place for a fraction of that time, is misleading. These are legacy financial obligations inherited from past administrations that operated under a completely different structure. The transformation of NNPC into NNPC Limited is a work in progress, and challenges remain. However, it is disingenuous to ignore the major strides made in the last few years while focusing only on legacy issues.
- One-Sided Analysis Ignoring NNPCL’s Challenges and Reforms
The write-up uses misleading exchange rates to miscalculate withheld revenue by applying today’s high exchange rate (₦1,500 – ₦1,700 per USD), to compute financial transactions that occurred when the naira was much stronger at the time the funds were withheld (e.g., ₦300 – ₦450 per USD). This approach significantly distorts the financial figures and creates an exaggerated impression of the scale of missing financial shortfalls. Such misrepresentation of figures due to changing exchange rates and inaccurate financial analysis, can easily mislead the public about the actual value of remittances at the time and create unwarranted panic.
Critics often conveniently ignores the immense operational challenges faced by the old NNPC as a corporation. Factors like pipeline vandalism and rampant oil theft, non-functional refineries leading to high importation costs and subsidy burdens; and sabotage within the oil and gas value chain, often beyond NNPC’s control, have historically affected crude oil sales and impacted NNPC’s ability to generate revenue effectively and make higher remittances. Instead of acknowledging these realities, the report focuses solely on revenue figures without considering the systemic challenges that made full remittances difficult.
The impact of pipeline vandalism, and crude oil theft, and security challenges have cost Nigeria billions of dollars in lost revenue, directly affecting the company’s ability to meet financial obligations. In some years, the company spent huge sums on repairing damaged pipelines, securing oil installations, and combating illegal refining activities—expenses that critics fail to account for. Improved pipeline security and Anti-Oil Theft Measures in collaboration with security agencies and other stakeholders, requires increase investment to implement stricter monitoring systems that reduce oil losses, to ensure revenue is maximized.
A significant portion of the so-called “withheld funds” is due to legally mandated statutory deductions and obligations, including petroleum subsidy payments (until mid-2023, when subsidies were removed) and operational costs related to crude oil production, pipeline security, and infrastructure repairs. A significant portion, N4.026 trillion, is attributed to certified subsidy claims, which have been a long-standing issue in Nigeria’s oil sector.
4.0 Implementation of the Petroleum Industry Act (PIA) and NNPCL’s New Business Model
The transition from NNPC (a government-controlled entity) to NNPC Limited (a commercially profit-driven national oil company with a new corporate structure) after the enactment of the PIA in 2021, is one of the most significant reforms in Nigeria’s energy sector. Unlike the old structure, NNPCL now operates with corporate governance principles, financial discipline, and independent decision-making. Unlike before, when NNPC had to rely on government budget allocations, NNPCL now funds its operations independently and is expected to remit dividends to shareholders (including the Nigerian government).
The PIA allows for deductions such as operational costs, JV cash calls, management fees, Frontier Exploration Funds (Sections 9[4] and 64[c], PIA), which have been interpreted to justify substantial withholdings. However, these interpretations are criticized for reducing government revenue, though the joint venture cash calls, which are required payments for Nigeria’s partnerships with oil companies. In addition, the lack of clear financing rules allows NNPCL to retain revenues for various purposes of discretionary spending, though these justifications are often criticized for lacking transparency and accountability.
These deductions are not revenue “diversions”, but necessary expenses approved by relevant government agencies. They are the multifaceted and complex reasons behind NNPC Limited’s decision to withhold large sums of money to fund the financial matters in these initiatives. All major financial decisions including subsidy payments and deductions, were made with the knowledge and approval of the federal government, particularly agencies like i) the Federal Ministry of Finance; ii) the Office of the Accountant-General of the Federation; iii) the Central Bank of Nigeria (CBN); and iv) the Nigerian Extractive Industries Transparency Initiative (NEITI).
The impact of the PIA since the transition include increased transparency under the NNPCL Limited, as it now undergoes regular financial audits by independent external global auditing firm auditors publishes its audited financial statements as reported ensuring compliance with global best practices.
This is a major departure from the past when such reports were not published and made public, especially to the National Assembly. This would prevent financial mismanagement and ensure and regulatory compliance and public accountability, a practice unheard of before the PIA reforms. Moreover, the company has now improved crude oil production and operational efficiency, despite ongoing security challenges.
NNPC Limited’s financial dealings are now subject to corporate governance standards and independent oversight by its board, who ensure compliance with PIA provisions and audit recommendations. The company is governed by a strong board chaired by an experienced hand, former Executive Director of Finance and External Relations at Mobil Oil Nigeria Plc Chief Pius Akinyelure, who was a close associate of President Bola Ahmed Tinubu.
Every major financial decision goes through this board for approval, and Agencies like NEITI, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Auditor-General’s office regularly scrutinize its accounts. The failure of the Ojobo’s article to acknowledge these developments suggests a deliberate attempt to undermine the progress made under the current leadership.
- Who is Behind This Attack on NNPC Limited?
Given the transformation currently taking place within NNPCL, it is worth asking: Who stands to benefit from discrediting its reforms?
Is this an attempt by individuals who profited from the old corrupt system to derail the ongoing reforms?
Is there a political agenda aimed at destabilizing NNPC Limited and its leadership, knowing very well that institutional corruption and political interference have also contributed to the lack of transparency and accountability within NNPCL?
Whatever the case, Nigerians should not be swayed by sensationalized reports that fail to provide a balanced perspective. The main reasons behind the NNPCL’s decision to withhold such large sums of money are due to structural issues from when it was a corporation, necessary deductions for operational and subsidy-related costs.
The ongoing PIA induced transformation in NNPCL is aimed at making Nigeria’s oil and gas sector more transparent, efficient, and profitable for the benefit of all citizens. While challenges remain, ongoing efforts to improve transparency has made it to now operate a new business model that is more accountable and commercially viable, with a clear mandate to maximize revenue for Nigeria.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) plays a critical role in addressing financial issues related to NNPCL by ensuring compliance, transparency, and efficiency in Nigeria’s upstream oil and gas sector. It plays a crucial watchdog role in ensuring that NNPCL accurately reports crude oil production and sales, remits the correct revenues to the government, does not make unauthorized financial deductions, and complies with PIA regulations.
Strengthening regulatory enforcement, strengthening Legislative oversight by National Assembly through conducting regular hearings on NNPCL’s financial performance and investigating cases of non-remittance or revenue shortfalls, and enhanced public scrutiny and civil society engagement, will help prevent revenue leakages, financial mismanagement, and non-compliance by NNPCL.
This will ensure that Nigeria gets the maximum benefit from its oil resources, as is often advocated by Civil society organizations (CSOs), such as NEITI, BudgIT, and the Centre for Anti-Corruption and Open Leadership (CACOL), should have access to NNPCL’s financial data.
6.0 Conclusion and Recommendations
While constructive criticism is welcome, it must be based on facts, fairness, and an acknowledgment of both past challenges and present reforms. The media must avoid being used as a tool to spread misinformation that could undermine confidence in the nation’s economic progress.
The leadership of NNPCL, under Mele Kyari and its board, remains committed to accountability, improved governance, and sustained contributions to national revenue. The Nigerian public deserves a fair and balanced narrative – not one driven by misrepresentation, half-truths, and deliberate attempts to discredit necessary reforms.
NNPCL should be required to review Total revenue from crude oil sales, all deductions made before they are applied, amount remitted to the government, justifications for any withheld funds. This will prevent secrecy and ensures public scrutiny of NNPCL’s finances.
Reforming the PIA is crucial to stopping the withholding of funds and ensuring that NNPCL operates with full transparency. By implementing clear remittance rules, independent audits, real-time tracking, and stricter penalties, Nigeria can maximize oil revenue collection and ensure sustainable national development.
Therefore, it is recommended that to prevent future withholding of funds and ensure greater transparency and accountability in NNPCL’s financial practices, the PIA needs key amendments and stricter enforcement mechanisms. It should explicitly define NNPCL’s revenue remittance obligations, including a fixed percentage of gross revenue that must be paid into the Federation Account as remittance.
The PIA should contain clearer rules on permissible deductions for operational costs, security expenses, and joint venture funding. This would eliminate ambiguity and prevent discretionary withholdings, and ensure deductions for cash calls, oil production costs, and subsidies are transparent and justified.
Prof. U. A. Danbatta (FNMGS), is the Director of the NNPCL-funded Centre for Inland Basins Studies (CIBS), Ahmadu Bello University, Zaria (22 February, 2025).
