The Federal Government has commenced a comprehensive forensic audit of the Nigerian National Petroleum Company Limited, a move aimed at scrutinising revenue deductions and significantly boosting remittances to the Federation Account.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this on Friday at a press conference in Abuja, where he briefed stakeholders on the latest developments in the Nigerian economy.
Edun confirmed that the probe, which is currently ongoing, was mandated by the Federation Account Allocation Committee to ensure transparency and accuracy in the revenues accruing to the federal, state, and local governments.
“It is an ongoing forensic audit of NNPC as mandated by the Federation Account Allocation Committee meeting. That is ongoing,” the Minister stated.
He explained that the audit is running concurrently with the implementation of a new presidential executive order, which directs that certain oil and gas revenues be paid directly into the Federation Account. The review is specifically examining the various deductions and charges that currently reduce the funds shared by the three tiers of government.
According to Edun, the Federal Executive Council had earlier set up a subcommittee to scrutinise “the deductions from the Federation Account, and in particular, the costs of collection of some of the deductions that were going on and the amounts that were being charged for actually doing that task.”
Executive Order Takes Effect
The Minister revealed that President Bola Tinubu, in a bid to safeguard oil and gas revenues, has directed that three key revenue streams—management fees, the frontier exploration fund, and gas flare penalties—be paid directly into the Federation Account.
“It’s within that context of looking at what should come into the Federation Account and what was going elsewhere that we have now been directed by Mr President, as owner of the executive order, to immediately flow these three elements… directly to the Federation Account,” Edun said.
He, however, stressed that the presidential directive does not override any existing legislative or institutional processes. “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, the accuracy, the transparency, and the accountability of the funds that are going to flow into it,” he added.
To ensure seamless implementation, a committee comprising federal and state representatives has been constituted and is scheduled to meet next week.
Boosting Domestic Resources
Linking the audit to broader fiscal reforms, the Minister emphasised that Nigeria must intensify domestic resource mobilisation, particularly in the face of elevated 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, warning that heavy debt service obligations are crowding out critical spending on health, education, and infrastructure.
To further block revenue leakages, Edun disclosed that the government is deploying technology across all ministries, departments, and agencies. He stated that all revenue-earning agencies have been directed to migrate to a unified digital platform to ensure real-time monitoring and accountability.
“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. Everybody will see how much somebody is meant to pay, how much he has paid, and how much he is owing,” he explained.
As part of this digital drive, the Minister announced the discontinuation of cash payments for government services effective from February 20, describing manual cash handling as incompatible with modern public finance management.
Addressing Collection Costs
Touching on the contentious issue of collection costs by revenue-generating agencies, Edun clarified that under the Fiscal Responsibility Act, agencies like the Nigerian Upstream Petroleum Regulatory Commission are restricted in the amount 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 stated.
The Minister also provided an update on the government’s social investment programme, revealing that 9.1 million households have benefited at least once from the direct benefit transfer scheme. He added that another one million households are set to be enrolled, with about five million more expected to be covered before the completion of the current phase.
The forensic audit and the new executive order are expected to resolve the long-debated issue of alleged remittance backlogs by NNPC, ultimately leading to increased revenues for the Federation Account and improved fiscal stability for the country.
Discussion about this post