Governors Clash with NNPC Over $42bn Oil Revenue Gap

Daftar Isi

Ongoing Dispute Between Nigerian National Petroleum Company and Audit Firm

A renewed conflict has emerged between the Nigerian National Petroleum Company Limited (NNPC Limited) and Periscope Consulting, the audit firm hired by the Nigeria Governors’ Forum to investigate an alleged under-remittance of oil revenue amounting to $42.37 billion (approximately N12.91 trillion) to the Federation Account between 2011 and 2017. This dispute has prompted the Federation Account Allocation Committee (FAAC) to call for a joint reconciliation session to determine the actual state of remittances and resolve the long-standing issue.

The latest developments were disclosed in the FAAC’s post-mortem review for November 2025, which outlined new exchanges between both parties regarding the disputed funds. The document revealed that NNPC Limited has formally rejected the audit findings, insisting that no outstanding revenue is owed to the Federation Account for the period under review. According to the company, all crude oil proceeds and associated earnings have been fully accounted for, challenging the claims made by Periscope Consulting.

Periscope Consulting, however, continues to dispute these claims, maintaining that its audit uncovered significant gaps in the remittances and that the alleged shortfall remains unresolved. The report highlighted that Periscope had previously accused the state oil company of withholding crude oil proceeds and other statutory revenues due to the Federation Account during the specified period.

This disagreement has led to a stalemate between the two parties, with consultants accusing the oil company of providing explanations that do not align with the audited data. In response, the FAAC sub-committee directed that NNPC Limited and Periscope Consulting meet jointly to harmonize records and "close out" the matter. The reconciliation process is currently ongoing.

Impact on State Finances and Fiscal Stability

The controversy marks the latest chapter in a prolonged dispute between state governments and the national oil company over transparency in oil revenue flows. In February 2025, the FAAC suspended its monthly meeting due to a dispute over outstanding remittances, raising concerns about potential delays in revenue disbursement to states.

The Governors’ Forum commissioned Periscope Consulting amid complaints that NNPC Limited's remittance practices, including handling of crude sales, domestic allocation, subsidy deductions, and joint venture cash calls, were opaque and inconsistent with expected inflows. With oil receipts forming the backbone of FAAC disbursements, any alleged shortfall threatens state and local government finances, already strained by rising inflation and shrinking real revenue.

NNPC Limited, now operating as a limited liability company under the Petroleum Industry Act (PIA), has consistently defended its processes, claiming improved accountability and asserting that independent audits often misinterpret commercial and regulatory procedures governing its operations.

Expert Insights and Recommendations

Commenting on the issue, Professor Emeritus of Petroleum Economics, Wumi Iledare, described the alleged $42.37 billion under-remittance as a legacy problem rooted in the pre-PIA regime. He emphasized that the former Nigerian National Petroleum Corporation operated with overlapping roles that made revenue reconciliation cumbersome and frequently disputed. Iledare stressed that similar discrepancies can be avoided through disciplined implementation of the PIA, real-time monitoring, and continuous independent audits.

He added that with transparent data and clear fiscal rules, future remittance disputes should not recur. “The lesson is clear: fully implement the PIA, strengthen real-time monitoring, and enforce continuous independent audits. With transparent data and clear rules, issues like this should not arise again. It is a legacy problem. The future depends on disciplined implementation of the PIA.”

Scrutiny of Frontier Exploration Fund

The Post-Mortem Sub-Committee further questioned NNPC Limited over gaps in its reporting on the utilization of the 30 per cent Frontier Exploration Fund, a statutory deduction introduced to finance oil and gas exploration in frontier basins. According to the committee’s review, NNPCL submitted utilization records for the fund covering the period 2008 to 2024, but the documents lacked project-specific details, including a breakdown of expenditure for each basin where exploration activities were carried out.

As a result, the committee requested a proper reconciliation that links each exploration project to the exact amount spent. The sub-committee awaits NNPCL’s updated submission, stating that the reconciliation remains a work in progress.

Outstanding Liabilities and World Bank Concerns

In a related development, the committee also reviewed outstanding liabilities owed by NNPCL to the Federal Inland Revenue Service and the Nigerian Upstream Petroleum Regulatory Commission for the period June to December 2023. The total outstanding payments amount to N2.03 trillion and are to be accounted for by the Office of the Accountant-General of the Federation.

The World Bank has criticized NNPCL for failing to fully remit oil revenues to the Federation Account, undermining fiscal transparency and macroeconomic stability. The institution noted that while the company was corporatised in 2021 to operate as a commercial entity, it still retains monopolistic control over crude oil sales and foreign exchange inflows, leading to persistent gaps between reported earnings and actual remittances.

Despite assurances from the NNPCL Group Chief Executive Officer, Bayo Ojulari, regarding transparency and compliance, legacy issues from previous years continue to cast doubt on the company’s efforts to enhance transparency.