Nigerias national oil company failed to pay 16 billion dollars to the federal government, an official audit report said.
Samuel Ukura, who presented the audit findings to the national assembly, said that Nigerian National Petroleum Corporation (NNPC) could not account for the money.
By law, NNPC is supposed to hand over revenues to the government for redistribution based on a parliament approved budget.
Nigeria is heavily dependant on revenues from its oil and gas sector to fund its budget.
The oil and gas sector accounts for about 35 per cent of gross domestic product, and petroleum exports revenue represents over 90 per cent of total exports revenue, according to OPEC.
Nigeria has an opaque bureaucracy that manages it oil industry and president Muhammadu Buhari is determined to break it up.
His government has announced measures to break up the state oil company into 30 companies to ensure transparency and accountability.
Under the new arrangement, each of the 30 units will have its Chief Executive and will be accountable for their tiles, Managing Director Emmanuel Kachikwu said.
"For the first time, we are unbundling the subset of the NNPC [Nigerian National Petroleum Corporation] to 30 independent companies with their own managing directors," Kachikwu, who is also the state minister for petroleum resources said in a statement.
"Titles like group executive directors are going to disappear and in their place you are going to have chief executive officers and they are going to take responsibilities for their titles," he said.
"At the end of the day, the CEO of an upstream company must deliver an upstream result."