FG writes off $1.42bn, N5.57tn NNPC debt

President Bola Tinubu has sanctioned the annulment of a significant portion of the debts owed by the Nigerian National Petroleum Company Limited to the Federation Account, effectively eliminating approximately $1.42 billion and N5.57 trillion following a reconciliation of records between the two entities.

This information is detailed in a document prepared by the Nigerian Upstream Petroleum Regulatory Commission and presented during the November meeting of the Federation Account Allocation Committee.

The report, titled "Report of October 2025 Revenue Collection Presented at the Federation Account Allocation Committee Meeting Held on 18th November 2025," was reported on Sunday.

In the section titled "Recovery from NNPC Ltd Outstanding Obligations," the commission indicated that the debts previously reported at the October 2025 FAAC meeting amounted to "$1,480,610,652.58 and N6,332,884,316,237.13 for PSC, DSDP, RA & MCA Liftings and JV & PSC Royalty Receivables respectively."

It revealed that the Presidency has now authorized the removal of the majority of these balances from the Federation’s accounts.

The document stated, "However, the commission has recently received a Presidential Approval to eliminate the outstanding obligations of NNPC Ltd as of 31st December 2024, as submitted by the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation."

Providing a detailed account of the affected balances, the NUPRC added, "Consequently, from the total of $1,480,610,652.58 and N6,332,884,316,237.13, the outstanding obligations that have been eliminated are $1,421,727,723.00 and N5,573,895,769,388.45. The commission has made the necessary accounting entries as approved."

An analysis of the figures indicates that the presidential directive has eradicated approximately 96 percent of the dollar-denominated debt and around 88 percent of the naira-denominated obligations that were previously reported as outstanding.

The document states that the approval was granted in accordance with the recommendations made by the Stakeholder Alignment Committee regarding the Reconciliation of Indebtedness between NNPC Ltd and the Federation, which assessed the company’s royalty and lifting-related liabilities up to December 31, 2024.

Despite the annulment of the legacy balances, new debts accrued in 2025 persist. In a distinct section labeled "NNPC Ltd Outstanding Obligations," the regulator revealed that statutory obligations incurred between January and October 2025 amounted to "$56,808,752.32 and N1,021,550,672,578.87 for PSC & MCA Liftings and JV Royalty Receivables respectively."

The commission further noted that a portion of the dollar component was recovered during the month under review, stating: "However, the commission received $55,003,997.00 in the month under review from the outstanding, resulting in a remaining balance of $1,804,755.32 and N1,021,550,672,578.87. The amount of $55,003,997.00 received is included in the total collection reported above for distribution by the Federation this month."

The NUPRC confirmed that it has already executed the directive in the Federation Account, emphasizing that "the Commission has made the necessary accounting entries as approved."

This approval effectively addresses long-standing disputes regarding NNPC’s legacy indebtedness to the Federation, while current liabilities from ongoing operations are still being monitored for future recovery.

Nevertheless, the debt cancellation occurs at a time when the commission is facing challenges in achieving its revenue targets for the year. Data from the NUPRC document indicated that against a 2025 approved monthly revenue goal of N1.204tn, the commission reported N660.04bn as actual collection for November 2025, resulting in a shortfall of N544.76bn for that month.

Royalty payments from oil and gas, which constitute the majority of upstream revenues, experienced a significant decline, falling well short of expectations. The sanctioned monthly royalty estimate was N1.144 trillion, whereas only N605.26 billion was actually collected in November, resulting in a shortfall of N538.92 billion.

As of November 30, 2025, the total approved revenue by the NUPRC reached N13.25 trillion, while the actual cumulative collections amounted to N7.60 trillion, indicating a revenue deficit of N5.65 trillion. Specifically for royalties, the cumulative approved collections were N12.59 trillion, in contrast to the N6.96 trillion that was actually received, leading to a shortfall of N5.63 trillion.

Additionally, the document revealed a decrease in revenue collections compared to the preceding month. In October 2025, N873.10 billion was collected, but this figure fell to N660.04 billion in November.

The PUNCH previously reported a conflict between the Nigerian National Petroleum Company Limited and Periscope Consulting, the auditing firm engaged by the Nigeria Governors’ Forum to investigate an alleged under-remittance of oil revenue amounting to $42.37 billion (approximately N12.91 trillion) to the Federation Account from 2011 to 2017.

This dispute, reignited by new submissions from both parties, compelled the Federation Account Allocation Committee to call for a joint reconciliation session aimed at clarifying the actual state of remittances and resolving the protracted deadlock.

According to a document reviewed by idealgist, the FAAC Sub-Committee has confirmed that NNPC has officially rejected the audit findings, asserting that there are no outstanding revenues owed to the Federation Account for the specified review period.

The national oil company asserted that all proceeds from crude oil and related earnings have been fully accounted for, contesting Periscope’s allegations of significant underpayment.

Conversely, Periscope Consulting firmly disagreed with NNPC Limited’s defense, stating that its audit revealed considerable gaps in remittances and that the purported $42.37 billion shortfall remains unaddressed.

The report stated, “NNPC Limited provided their response concerning the $42,373,896,555.00 under remittance to the Federation Account as detailed in the report by Periscope Consulting. It is important to note that Periscope Consulting was the consultant engaged by the Governors’ Forum to investigate NNPC Limited’s under remittance to the Federation Account.

“NNPC Limited contended that all revenues owed to the Federation have been accurately accounted for and that there are no outstanding amounts for the review period.”

This disagreement has resulted in a deadlock between both parties, with the consultants accusing the oil company of offering explanations that do not align with the audited data.

The FAAC sub-committee, recognizing the conflicting positions, has instructed that NNPC Ltd and Periscope Consulting must convene jointly to reconcile records and “close out” the issue. It further noted that the reconciliation process is still ongoing.

“Responding, Periscope Consulting expressed disagreement with NNPC Ltd’s stance; therefore, the Sub-Committee mandated that a joint meeting be held between the two parties to resolve the matter. This task is currently in progress,” it stated.

Earlier, a distinguished Professor Emeritus of Petroleum Economics, Wumi Iledare, remarked that the alleged $42.37 billion under-remittance recorded from 2011 to 2017 highlights persistent deficiencies in Nigeria’s pre–Petroleum Industry Act framework.

According to him, the previous Nigerian National Petroleum Corporation functioned with overlapping responsibilities that complicated revenue reconciliation and often led to disputes. Iledare referred to the issue as a “legacy problem,” emphasizing that such discrepancies can only be prevented through the disciplined execution of the PIA, real-time monitoring, and ongoing independent audits.

The World Bank previously accused NNPCL of not fully remitting oil revenues to the Federation Account, which undermines fiscal transparency and macroeconomic stability.

The bank observed that although the company was corporatized in 2021 to function as a commercial entity, it still maintains monopolistic control over crude oil sales and foreign exchange inflows, resulting in ongoing discrepancies between reported earnings and actual remittances.

“NNPC Ltd has continued to be a significant source of revenue leakages,” the World Bank remarked, urging the government to “enhance oversight, ensure complete disclosure of oil proceeds, and improve transparency in the management of federation revenue.”

The institution indicated that the state-owned company has only been remitting 50 percent of revenue gains from the elimination of the Premium Motor Spirit subsidy to the Federation Account.

It reported that out of the N1.1 trillion revenue from crude sales and other income in 2024, NNPC Ltd only remitted N600 billion, resulting in a deficit of N500 billion that remains unaccounted for.

“Even though the subsidy was entirely removed in October 2024, NNPC Ltd began transferring the revenue gains to the Federation only in January 2025. Since that time, it has been remitting only 50 percent of these gains, utilizing the remainder to settle past arrears,” the World Bank noted.

Since taking office, the NNPC Ltd Group Chief Executive Officer, Bayo Ojulari, has consistently committed to establishing transparency, efficiency, and accountability in th