FG Writes Off $1.42bn, N5.57tn in NNPC Legacy Debts After Reconciliation

President Bola Tinubu has approved the cancellation of a large portion of the debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, wiping off about $1.42bn and N5.57tn following 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, titled “Report of October 2025 Revenue Collection Presented at the Federation Account Allocation Committee Meeting Held on 18th November 2025,” was obtained by Opinion Nigeria on Sunday.

Under the section, “Recovery from NNPC Ltd Outstanding Obligations,” the commission stated that debts earlier reported at the October 2025 FAAC meeting stood at $1,480,610,652.58 and N6,332,884,316,237.13, covering PSC, DSDP, RA and MCA liftings, as well as JV and PSC royalty receivables.

According to the document, the Presidency has now approved that most of these balances be removed from the Federation’s books. It stated:

“However, the commission recently received a Presidential Approval to nil off the outstanding obligations of NNPC Ltd as at 31st December 2024 as submitted by the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation.”

Providing a breakdown, the NUPRC added:

“Consequently, out of $1,480,610,652.58 and N6,332,884,316,237.13, the affected outstanding obligations that have been nil off are $1,421,727,723.00 and N5,573,895,769,388.45. The commission has passed the appropriate accounting entries as approved.”

An analysis of the figures shows that the approval wiped out about 96 per cent of the dollar-denominated debt and roughly 88 per cent of the naira-denominated obligations previously reported as outstanding.

The document indicates that the approval followed recommendations by the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation, which reviewed the company’s royalty and lifting-related liabilities up to December 31, 2024.

Despite the clearance of these legacy balances, fresh obligations incurred in 2025 remain. In a separate section titled “NNPC Ltd Outstanding Obligations,” the regulator disclosed that statutory debts arising between January and October 2025 stood at $56,808,752.32 and N1,021,550,672,578.87 for PSC and MCA liftings, and JV royalty receivables respectively.

The commission noted that part of the dollar-denominated debt was recovered during the review period, stating:

“However, the commission received $55,003,997.00 in the month under review from the outstanding, leaving a balance of $1,804,755.32 and N1,021,550,672,578.87. The amount of $55,003,997.00 received is part of the total collection reported above for sharing by the Federation this month.”

The NUPRC confirmed that it had implemented the presidential directive in the Federation Account, noting that “the Commission has passed the appropriate accounting entries as approved.”

While the approval resolves long-standing disputes over NNPC’s legacy indebtedness, the document shows that the commission is grappling with revenue shortfalls. Against an approved 2025 monthly revenue target of N1.204tn, the NUPRC recorded N660.04bn in actual collections for November 2025, resulting in a N544.76bn shortfall.

Royalty revenues were particularly affected, with an approved monthly projection of N1.144tn compared to N605.26bn actually collected, leaving a deficit of N538.92bn. Cumulatively, as of November 30, 2025, approved revenue stood at N13.25tn, while actual collections amounted to N7.60tn, creating a gap of N5.65tn.

The report also showed a month-on-month decline, with collections falling from N873.10bn in October 2025 to N660.04bn in November.

Meanwhile, disputes over alleged historical under-remittance of oil revenues persist. Opinion Nigeria earlier reported a clash between NNPC Ltd and Periscope Consulting, the audit firm engaged by the Nigeria Governors’ Forum, over claims that $42.37bn (about N12.91tn) was under-remitted to the Federation Account between 2011 and 2017.

According to FAAC documents, NNPC Ltd rejected the audit findings, insisting that all revenues due to the Federation had been fully accounted for. Periscope Consulting, however, maintained that substantial gaps remained unresolved.

The FAAC Sub-Committee, noting the conflicting positions, directed both parties to hold a joint reconciliation meeting to harmonise records and close out the matter, describing the process as ongoing.

Speaking earlier with The PUNCH, Professor Emeritus of Petroleum Economics, Wumi Iledare, described the controversy as a “legacy problem” rooted in structural flaws before the Petroleum Industry Act, stressing that stricter implementation, real-time monitoring and independent audits are needed to prevent future discrepancies.

The World Bank has also accused NNPC Ltd of failing to fully remit oil revenues, warning that this undermines fiscal transparency. It noted that despite subsidy removal, the company has been remitting only 50 per cent of related revenue gains to the Federation Account, using the remainder to offset past arrears.

Since assuming office, NNPC Ltd Group CEO, Bayo Ojulari, has repeatedly pledged to entrench transparency, efficiency and accountability, assuring that the company’s dealings with the Federation Account would fully comply with fiscal rules.

Opinion Nigeria News