Tinubu approves cancellation of $1.42bn, ₦5.57tn NNPC debt to federation

President Bola Ahmed Tinubu has approved the cancellation of a significant portion of the debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, wiping off about $1.42 billion and ₦5.57 trillion following a reconciliation of records between both parties.

The approval is contained in a document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November 2025 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 The PUNCH on Sunday.

Under the section, “Recovery from NNPC Ltd Outstanding Obligations,” the commission disclosed that debts previously reported at the October FAAC meeting stood at $1.48bn and ₦6.33tn, covering obligations from PSC, DSDP, RA & MCA liftings, as well as JV and PSC royalty receivables.

However, the document revealed that the Presidency has now approved that most of these liabilities be removed from the Federation’s books.

“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,” the report stated.

According to the NUPRC, $1.42bn and ₦5.57tn out of the previously reported balances were officially written off, representing about 96 per cent of the dollar-denominated debt and 88 per cent of the naira obligations.

“The commission has passed the appropriate accounting entries as approved,” it added.

The debt cancellation followed recommendations by the Stakeholder Alignment Committee, which reviewed NNPC’s royalty and lifting-related liabilities up to December 31, 2024, effectively resolving long-standing disputes over the company’s legacy indebtedness.

However, the report noted that fresh liabilities incurred in 2025 remain outstanding. Statutory obligations arising between January and October 2025 stood at $56.8m and ₦1.02tn, though the commission confirmed that $55m was recovered during the review month, leaving a balance of $1.8m alongside the naira obligations.

Despite the relief granted to NNPC’s legacy debts, the NUPRC admitted it is struggling to meet its revenue targets. Against a monthly revenue projection of ₦1.204tn, the commission recorded ₦660.04bn in November 2025, resulting in a ₦544.76bn shortfall.

Royalty collections were also significantly below expectations, with ₦605.26bn collected against an approved projection of ₦1.144tn.

Cumulatively, as of November 30, 2025, the commission recorded ₦7.60tn in actual revenue against an approved target of ₦13.25tn, leaving a ₦5.65tn deficit.

The development comes amid renewed controversy over alleged $42.37bn under-remittance by NNPC Ltd between 2011 and 2017, following a dispute between the company and Periscope Consulting, an audit firm engaged by the Nigeria Governors’ Forum.

While NNPC has rejected the audit findings, insisting all revenues were properly accounted for, Periscope has maintained that substantial remittance gaps remain unresolved. FAAC has since ordered a joint reconciliation session, which remains ongoing.

Commenting earlier, Professor Emeritus of Petroleum Economics, Wumi Iledare, described the controversy as a legacy issue rooted in Nigeria’s pre–Petroleum Industry Act framework, noting that stricter oversight and continuous audits are required to prevent future discrepancies.

The World Bank has also previously accused NNPC Ltd of revenue leakages, stating that the company remitted only 50 per cent of subsidy removal gains to the Federation Account in 2024.

Since assuming office, NNPC Ltd Group CEO Bayo Ojulari has repeatedly pledged transparency and full compliance with fiscal rules, assuring Nigerians and investors that the company’s books would remain open and accountable.

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