The House of Representatives Committee on Public Accounts has initiated a high-profile investigation into the Nigerian National Petroleum Company Limited (NNPC Ltd) and several oil companies over allegations of failing to remit $1.6billion in royalties to the Federation Account.
The probe, launched on Tuesday, follows a damning audit report by the Office of the Auditor-General for the Federation (OAuGF), which flagged discrepancies in remittances linked to Production Sharing Contracts (PSCs), Repayment Agreements, and Modified Carry Arrangements.
According to the 2021 OAuGF report presented at the hearing, NNPC Ltd and oil firms collectively owed $1.6 billion in unpaid royalties as of December 2021.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) disclosed that the debts stemmed from contractual obligations under oil and gas production agreements.
Further findings revealed NNPC Ltd’s counterclaims against the Federation, totaling N1.9trillion, complicating the financial reconciliation process.
Responding to the allegations, NNPC’s Group Chief Executive Officer, Mele Kyari, represented by Chief Financial Officer, Dapo Segun, defended the company’s actions. Segun explained that portions of the funds in question were legally channelled into Government Priority Projects (GPP) and petrol subsidy payments until their removal in September 2023.
These deductions, he noted, were drawn from the Federation’s crude oil and gas entitlements—including royalties—as approved in national budgets passed by the National Assembly.
“No deductions were made in 2023 and 2024 for GPP, as these were contingent on the passage of the Petroleum Industry Act (PIA),” Segun clarified. He emphasized that a reconciliation process overseen by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, is underway to resolve NNPC’s N1.9 trillion claims against the Federation. “Once concluded, reports will be shared with relevant agencies,” he assured.
Chairman of the Sub-Committee, Hon. Akinlade Isiaq, reaffirmed the panel’s resolve to recover the debts, stressing that the investigation will extend through 2025 to ascertain the status of the debts as of December 2024.
“This hearing is critical to ensuring Nigeria’s resources are accounted for. We will take all necessary steps to recover what is owed to the Federation,” Isiaq stated, underscoring commitments to transparency and accountability.
The committee also summoned oil companies named in the NUPRC report, which allegedly owe $929 million as of September 2024. Key agencies, including the Central Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS), Nigeria Extractive Industries Transparency Initiative (NEITI), and the Revenue Mobilization Allocation and Fiscal Commission (RMAFC), have been invited to provide clarity on fiscal processes and legal frameworks governing the payments.
The probe marks a significant push to address longstanding opacity in Nigeria’s oil sector, which accounts for over 80% of national revenue.
With public finances strained by subsidy removals and economic reforms, lawmakers and civil society groups have intensified calls for stringent oversight of NNPC Ltd’s operations since its transition to a fully commercial entity under the PIA (2021).
The committee also invited the alleged oil companies indicted by the NUPRC report that owed the federal government the sum of $929m as at 30th September, 2024.