President Bola Tinubu has approved the cancellation of a large portion of debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, wiping off about $1.42bn and ₦5.57tn after a reconciliation exercise.
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).
According to the report, the debts — which related to production sharing contracts (PSC), direct sale direct purchase (DSDP), royalty adjustments and joint venture obligations — were reviewed by a Stakeholder Alignment Committee set up to reconcile outstanding liabilities between NNPC Ltd and the Federation as of December 31, 2024.
Before the reconciliation, the debts stood at $1.48bn and ₦6.33tn. However, following presidential approval, $1.42bn and ₦5.57tn of those figures were removed from the Federation’s books, representing about 96 per cent of the dollar-denominated debt and 88 per cent of the naira obligations.
The NUPRC confirmed that it had already implemented the directive and passed the necessary accounting entries in the Federation Account.
Despite the write-off of the legacy debts, the regulator noted that new obligations accumulated in 2025 are still outstanding. Between January and October 2025, NNPC Ltd owed $56.8m and ₦1.02tn in statutory payments. Part of the dollar debt — about $55m — was recovered in the review period, leaving a balance of $1.8m, while the naira obligation remains unpaid.
The debt cancellation comes amid broader concerns about revenue shortfalls. Data from the NUPRC showed that in November 2025, the commission recorded ₦660bn in actual revenue, far below its monthly target of ₦1.2tn. Royalty collections also underperformed significantly, with a shortfall of over ₦538bn for the month.
Cumulatively, as of November 2025, total approved revenue stood at ₦13.25tn, while actual collections were ₦7.6tn — leaving a gap of ₦5.65tn. Royalties alone accounted for ₦5.63tn of that shortfall.
Meanwhile, long-standing disputes over alleged under-remittance of oil revenues remain unresolved. The FAAC recently ordered a joint reconciliation between NNPC Ltd and 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.
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NNPC Ltd has rejected the audit findings, insisting that all revenues for the period were fully accounted for. Periscope Consulting, however, maintains that its audit uncovered major gaps in remittances. FAAC has directed both parties to harmonise records and conclude the matter.
Experts have described the controversy as a legacy issue rooted in weaknesses of Nigeria’s pre–Petroleum Industry Act framework, while institutions like the World Bank have continued to raise concerns about transparency, revenue leakages and partial remittance of oil earnings by NNPC Ltd.
NNPC management has repeatedly pledged to improve transparency and accountability, assuring Nigerians that the company’s dealings with the Federation Account will comply fully with fiscal and regulatory standards.
