President Bola Tinubu has approved the cancellation of a significant portion of debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, erasing approximately $1.42 billion and ₦5.57 trillion. The directive follows a comprehensive reconciliation of records between the NNPCL Ltd and the Federation.
The approval was documented in the “Report of October 2025 Revenue Collection Presented at the Federation Account Allocation Committee Meeting” prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November FAAC session. According to the report, the directive effectively wiped out 96% of the dollar-denominated debt and 88% of the naira-denominated obligations previously recorded.
The cancellation covers legacy obligations up to December 31, 2024, including liabilities from Production Sharing Contracts (PSC), Direct Sale Direct Purchase (DSDP), Royalty, and Joint Venture (JV) liftings. NUPRC confirmed that the appropriate accounting entries have been implemented to reflect the directive in the Federation Account.
Current Debts and Revenue Shortfalls
While legacy debts have been cleared, fresh obligations from January to October 2025 remain. NUPRC data shows statutory dues of $56.8 million and ₦1.02 trillion naira, with part of the dollar component already recovered, leaving $1.8 million outstanding.
The report also revealed revenue challenges. Against a monthly approved collection of ₦1.204 trillion, only ₦660.04 billion was collected in November 2025, leaving a deficit of ₦544.76 billion. Oil royalties, a major revenue driver, fell short by ₦538.92 billion, highlighting the ongoing difficulty of meeting fiscal projections despite the debt write-off.
Legacy Audit Disputes and Oversight
The debt cancellation comes amid lingering disputes over under-remittance claims. Periscope Consulting, engaged by the Nigeria Governors’ Forum, alleged that NNPC Ltd underpaid $42.37 billion (₦12.91 trillion) between 2011 and 2017. NNPC Ltd, however, rejected the findings, asserting full remittance of all revenues due.
The FAAC Sub-Committee has mandated a joint reconciliation session to harmonise records and resolve the stalemate. Industry experts, including Prof. Wumi Iledare, described the issue as a legacy problem stemming from overlapping roles under Nigeria’s pre–Petroleum Industry Act framework, urging disciplined implementation of the PIA and independent audits for transparency.
The World Bank has similarly called for improved oversight, noting that NNPCL Ltd’s partial remittances and control over crude sales continue to create revenue gaps, affecting fiscal transparency and macroeconomic stability.
The FG’s bold debt cancellation signals an effort to streamline NNPC Ltd’s balance sheet and settle legacy disputes. However, the ongoing revenue shortfalls and unresolved under-remittance claims suggest that structural reforms and stronger monitoring remain critical to securing sustainable upstream revenues.
