President Bola Tinubu has approved the cancellation of a substantial portion of the debts owed by the Nigerian National Petroleum Company Limited (NNPC) to the Federation Account, effectively wiping off about $1.42bn and ₦5.57tn after a reconciliation of records between both parties.
The decision 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). The report details revenue collections for October 2025 and the resolution of long-standing disputes over NNPC’s legacy obligations.
According to the document, earlier figures presented to FAAC in October put NNPC’s outstanding obligations at $1.48bn and ₦6.33tn, covering production sharing contracts, direct sale–direct purchase arrangements, royalties and joint venture liabilities. Following a reconciliation exercise, most of those balances have now been removed from the Federation’s books.
The report states that the commission “recently received a presidential approval to nil off the outstanding obligations of NNPC Ltd as of 31 December 2024 as submitted by the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation.”
In practical terms, this meant cancelling $1.42bn and ₦5.57tn of the previously reported sums. An analysis of the figures shows that about 96% of the dollar-denominated debt and roughly 88% of the naira obligations were written off. The NUPRC said it had already passed the appropriate accounting entries to reflect the directive.
The approval follows recommendations by a stakeholder committee that reviewed NNPC’s royalty and lifting-related liabilities up to the end of 2024, effectively drawing a line under what officials have described as “legacy balances”.
However, the document also makes clear that fresh debts accumulated in 2025 remain on the books. Statutory obligations arising between January and October 2025 were put at $56.8m and ₦1.02tn. While the commission said it recovered $55m of the dollar component during the period under review, a balance of $1.8m and the full naira amount remain outstanding.
The move resolves a long-running dispute over NNPC’s historical indebtedness to the Federation Account, but it comes against a backdrop of widening revenue shortfalls. The same NUPRC report shows that the commission is struggling to meet its 2025 revenue projections.
Against an approved monthly revenue target of ₦1.2tn, actual collections for November stood at ₦660bn, leaving a shortfall of ₦544.8bn. Royalty payments on oil and gas, which make up the bulk of upstream revenues, fell particularly sharply: ₦605bn was collected against a projected ₦1.14tn.
Cumulatively, by the end of November 2025, approved revenues of ₦13.25tn contrasted with actual collections of ₦7.6tn, creating a gap of ₦5.65tn. Royalty receipts alone showed a shortfall of ₦5.63tn. Revenue also declined month on month, dropping from ₦873bn in October to ₦660bn in November.
The debt write-off also sits alongside an unresolved row over alleged under-remittance of oil revenues in earlier years. As previously reported, NNPC has clashed with Periscope Consulting, an audit firm engaged by the Nigeria Governors’ Forum, over claims that $42.37bn was under-remitted to the Federation Account between 2011 and 2017.
NNPC has rejected the findings, insisting that all revenues due to the federation for the period were fully accounted for. Periscope, however, has maintained that its audit uncovered substantial gaps. The FAAC subcommittee has since ordered a joint reconciliation to “close out” the matter, which it described as still a work in progress.
Experts say the dispute reflects deeper structural problems. Wumi Iledare, a professor emeritus of petroleum economics, has described the controversy as a legacy of Nigeria’s pre–Petroleum Industry Act regime, in which the former national oil corporation combined regulatory, commercial and operational roles. He has argued that only disciplined implementation of the PIA, real-time monitoring and continuous independent audits can prevent similar discrepancies.
International institutions have also raised concerns. The World Bank has accused NNPC of failing to fully remit oil revenues to the Federation Account, warning that this undermines fiscal transparency and macroeconomic stability. It has noted that, despite its corporatisation in 2021, the company retains monopolistic control over crude oil sales and foreign exchange inflows.
According to the bank, NNPC has remitted only about half of the revenue gains from the removal of petrol subsidies, leaving significant sums unaccounted for. While NNPC’s current leadership has pledged greater transparency and compliance with fiscal rules, the tension between debt relief, ongoing liabilities and weak revenue performance continues to cast a long shadow over Nigeria’s public finances.
