Federal Government Launches Forensic Audit of NNPC
The Nigerian Federal Government has initiated a comprehensive forensic audit of the Nigerian National Petroleum Company Limited (NNPC) as part of broader efforts to enhance transparency and accountability in oil revenue management. This move comes amid ongoing discussions about the allocation of funds into the Federation Account, which serves as the central repository for revenues generated from natural resources.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, confirmed the audit during a press conference in Abuja. He emphasized that the audit is mandated by the Federation Account Allocation Committee and is currently underway. “It is an ongoing forensic audit of NNPC as mandated by the Federation Account Allocation Committee meeting. That is ongoing,” he stated.
Executive Order and Revenue Flow
In addition to the audit, a new presidential executive order has been implemented, directing specific oil and gas revenues to be paid directly into the Federation Account. This includes management fees, frontier funds, and gas flare penalties. According to Edun, this directive aims to ensure that these funds reach the government without being diverted elsewhere.
“The directive does not override any ongoing legislative or institutional processes,” he clarified. “It does not prejudice anything else that is ongoing, whether at the National Assembly or the legislature or any other action that is looking at this all-important area of the Federation Account.”
A committee comprising federal and state representatives has been established to oversee the implementation of the executive order. The group is scheduled to meet next week to discuss the next steps.
Addressing Revenue Deductions
The audit also seeks to examine deductions and charges that reduce what eventually accrues to the Federal Government, states, and local governments. Edun explained that the Federal Executive Council had previously mandated a subcommittee to scrutinize these deductions, particularly the costs associated with collecting them.
“This is within the context of looking at what should come into the Federation Account and what was going elsewhere,” he said. “We have now been directed by Mr President, as owner of the executive order, to immediately flow these three elements—management fee, frontier fund, as well as the gas flare penalty—directly to the Federation Account.”
Fiscal Reforms and Domestic Resource Mobilization
Edun highlighted the importance of domestic resource mobilization in light of rising global interest rates and limited fiscal space. “Within that context, there is a need to focus on domestic resource mobilisation, rather than debt financing that is not self-paid,” he said. He warned that heavy debt service obligations could crowd out essential spending on health, education, and infrastructure.
To improve revenue transparency, the government is deploying technology across ministries, departments, and agencies. Revenue-earning agencies have been directed to migrate to a unified digital platform. “All revenue-earning agencies should be on the same technical platform. An investment has been made in technology. We have advisors. We have a consortium. And the revenue agencies are given that platform on which to collect funds,” he said.
Edun also announced that cash payments for government services will be discontinued from February 20, citing manual cash handling as incompatible with modern public finance management.
Regulatory Compliance and Revenue Collection
Regarding the cost of collection by certain agencies, Edun noted that under existing financial regulations and the Fiscal Responsibility Act, agencies are restricted in the portion of revenue they can retain. “Under the financial regulations, under the Fiscal Responsibility Act, effectively, no matter what the likes of NUPRC or others collect, they’re only entitled to spend a maximum of 50 per cent of it. Their surplus must come to the government,” he said.
Private Sector Engagement and Social Protection
Beyond oil revenue issues, Edun disclosed that the government is engaging private equity investors regarding concerns around the application of capital gains tax. He warned that sudden capital exits could destabilize markets. “It can affect the markets dramatically, because if they all decide that on one day, this doesn’t pay them, and they’re off, it would be negative for us, so we have every reason to sit down with them and discuss the issue of capital gains tax,” he said.
On social protection, Edun reported that 9.1 million households have benefited at least once from the direct benefit transfer programme, with another one million set to be paid and about five million more to be covered before the current phase concludes.
