FG Clears $1.42bn and ₦5.57tn Debt Owed by NNPC

President Bola Tinubu has approved the cancellation of a large portion of the Nigerian National Petroleum Company Limited’s debts to the Federation Account, eliminating about $1.42bn and N5.57tn following a reconciliation of records between both parties.

The approval is contained in a document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November meeting of the Federation Account Allocation Committee (FAAC).

Titled “Report of October 2025 Revenue Collection Presented at the Federation Account Allocation Committee Meeting Held on 18th November 2025,” the report outlines the adjustments made to NNPC Ltd’s outstanding obligations.

Under the section “Recovery from NNPC Ltd Outstanding Obligations,” the commission reported that debts earlier presented at the October 2025 FAAC meeting stood at $1.48bn and N6.33tn, covering liabilities from Production Sharing Contracts, Direct Sale Direct Purchase arrangements, Royalty Adjustments, Modified Carry Agreements, liftings, and joint venture royalties.

The commission disclosed that the Presidency approved the removal of most of these balances from the Federation’s books.

According to the document, the commission received presidential approval to write off NNPC Ltd’s outstanding obligations as of December 31, 2024, based on submissions by the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation.

Breaking down the figures, the NUPRC stated that out of the $1.48bn and N6.33tn previously recorded, $1.42bn and N5.57tn were written off. The commission confirmed that it had already passed the required accounting entries in line with the approval.

An analysis of the figures shows that the directive cleared about 96 per cent of the dollar-denominated debt and roughly 88 per cent of the naira-denominated obligations earlier classified as outstanding.

The document explained that the approval followed a detailed review by the Stakeholder Alignment Committee, which examined NNPC Ltd’s royalty and lifting-related liabilities up to December 31, 2024.

Despite the clearance of legacy debts, new obligations accumulated in 2025 remain outstanding. In a separate section titled “NNPC Ltd Outstanding Obligations,” the commission reported that statutory liabilities incurred between January and October 2025 amounted to $56.81m and N1.02tn for PSC and MCA liftings, as well as joint venture royalty receivables.

The commission noted that it recovered $55m from the dollar component during the month under review, leaving a balance of $1.8m alongside the full naira obligation. It added that the recovered amount formed part of the total revenue distributed by the Federation for the month.

NUPRC confirmed that it had fully implemented the presidential directive in the Federation Account.

The decision effectively settles long-standing disputes over NNPC Ltd’s legacy indebtedness to the Federation, while regulators continue to track current liabilities from ongoing operations for future recovery.

However, the debt cancellation comes amid challenges in meeting revenue targets. The document showed that against a monthly revenue target of N1.204tn for 2025, the commission recorded actual collections of N660.04bn in November, resulting in a shortfall of N544.76bn.

Royalty receipts accounted for most of the decline. While the approved monthly royalty projection stood at N1.144tn, actual collections in November reached only N605.26bn, leaving a deficit of N538.92bn.

As of November 30, 2025, total approved revenue for the year stood at N13.25tn, while cumulative collections reached N7.60tn, creating a revenue gap of N5.65tn. For royalties alone, cumulative approved collections of N12.59tn contrasted with N6.96tn actually received, producing a shortfall of N5.63tn.

The data also showed a month-on-month decline in collections, falling from N873.10bn in October to N660.04bn in November.

Meanwhile, disputes over historical remittances remain unresolved. A long-running disagreement persists between NNPC Ltd and Periscope Consulting, the audit firm engaged by the Nigeria Governors’ Forum to review alleged under-remittance of oil revenues amounting to $42.37bn between 2011 and 2017.

Following renewed submissions from both sides, FAAC mandated a joint reconciliation exercise to determine the actual level of remittances and resolve the impasse.

FAAC’s sub-committee confirmed that NNPC Ltd rejected Periscope’s findings, insisting that it fully accounted for all revenues due to the Federation Account during the period under review.

Periscope Consulting, however, maintained that its audit identified substantial gaps in remittances and that the alleged $42.37bn shortfall remains unresolved.

Due to the conflicting positions, the FAAC sub-committee directed both parties to hold joint reconciliation meetings to harmonise records and close out the matter, noting that the process is still ongoing.

A professor emeritus of petroleum economics, Wumi Iledare, described the controversy as a legacy issue stemming from structural weaknesses in Nigeria’s pre–Petroleum Industry Act framework. He explained that overlapping roles previously held by the former national oil company complicated revenue reconciliation and fuelled disputes. According to him, strict implementation of the PIA, real-time monitoring, and continuous independent audits remain critical to preventing future discrepancies.

The World Bank has also criticized NNPC Ltd for failing to fully remit oil revenues to the Federation Account, warning that the practice undermines fiscal transparency and macroeconomic stability.

The bank noted that despite its corporatization in 2021, NNPC Ltd still controls crude oil sales and foreign exchange inflows, contributing to persistent gaps between reported earnings and actual remittances.

According to the World Bank, NNPC Ltd has remitted only 50 per cent of revenue gains from the removal of the petrol subsidy. It said that out of N1.1tn generated from crude sales and other income in 2024, the company remitted N600bn, leaving N500bn unaccounted for.

The bank further stated that although the subsidy was fully removed in October 2024, NNPC Ltd only began transferring the resulting revenue gains in January 2025 and has since used half of the proceeds to offset past arrears.

Since assuming office, NNPC Ltd Group Chief Executive Officer Bayo Ojulari has pledged to strengthen transparency, efficiency, and accountability. He has assured stakeholders that the company’s financial records will remain open and that all dealings with the Federation Account will comply strictly with fiscal regulations.