World Bank Faults NNPCL Revenue Reporting Inconsistencies
The World Bank has highlighted significant transparency issues within the Nigerian National Petroleum Company Limited (NNPCL), citing inconsistencies in its revenue reports to the Federation Account Allocation Committee (FAAC). In its Accelerating Resource Mobilisation Reforms (ARMOR) report, the World Bank expressed concerns over NNPCL’s opaque reporting practices, which it claims undermine effective oversight of Nigeria’s oil and gas revenues.
“Non-transparent reporting to the Federal Ministry of Finance and FAAC makes it difficult for authorities to oversee NNPCL’s performance, calculate anticipated oil and gas revenues, and determine discrepancies between NNPCL’s reported revenues and what actually reaches the Federation,” stated the report, obtained by The Publisher Nigeria.
The report further revealed that NNPCL’s submissions to FAAC lack critical details, such as pledged revenues, the tradeable value of crude oil, and global payment receipts, as observed in the Nigeria Public Finance Review 2022. Additionally, NNPCL’s quasi-fiscal activities, including in-kind revenues and deductions directly from revenues, prevent clear financial accounting of funds intended for the Federation Account.
The World Bank also pointed to a particular instance where NNPCL committed to supplying 35,000 barrels of crude oil per day in exchange for a 20 percent stake in the Dangote Refinery. Despite projections that pledged oil revenue could reach $5.8 billion by 2022, NNPCL’s reported returns fell short.
Citing Nigeria’s reliance on oil and gas as a fiscal vulnerability, the World Bank noted that while oil prices rose by 116% between 2020 and 2022, oil and gas revenue transfers to the Federation fell due to declining production and the cost of subsidies. Production fell from 1.8 million barrels per day in 2020 to 1.4 million in 2022-2023, worsened by insecurity and inadequate investment.
The report underscored that, in addition to subsidy costs, NNPCL has retained revenue for projects such as a gas pipeline to Morocco, entering into contracts that pledge future oil and gas revenue as payments to business partners.
These revelations highlight Nigeria’s pressing need for enhanced transparency and fiscal management within its oil sector, with the World Bank urging reforms to safeguard Nigeria’s economic stability amidst a shrinking oil revenue base. Pick n Pay Exits Nigeria Amid Wave of Retail Market
