President Bola Tinubu has approved the cancellation of substantial debts owed by the Nigerian National Petroleum Company Limited to the Federation Account, writing off approximately $1.42bn and N5.57tn after financial reconciliation between the parties.
The Nigerian Upstream Petroleum Regulatory Commission disclosed this in a document presented at the November Federation Account Allocation Committee meeting.
According to the report titled “Report of October 2025 Revenue Collection Presented at the Federation Account Allocation Committee Meeting Held on 18th November 2025,” obtained on Sunday, the debts initially reported at the October FAAC meeting totaled “$1,480,610,652.58 and N6,332,884,316,237.13 for PSC, DSDP, RA & MCA Liftings and JV & PSC Royalty Receivables.”
Under the section labeled “Recovery from NNPC Ltd Outstanding Obligations,” the commission stated that the Presidency has approved removing most of these balances from the Federation’s books.
“The commission recently received 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 document stated.
The NUPRC detailed that “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.”
Analysis of the figures shows the presidential approval eliminated approximately 96 percent of the dollar-denominated debt and roughly 88 percent of the naira-denominated liabilities previously recorded as outstanding.
The approval followed recommendations from the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation, which examined the company’s royalty and lifting-related obligations through December 31, 2024.
However, fresh obligations incurred in 2025 remain active. The regulator noted that statutory liabilities from January to October 2025 stand at “$56,808,752.32 and N1,021,550,672,578.87 for PSC & MCA Liftings and JV Royalty Receivables.”
The commission reported partial recovery of the dollar component, stating: “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 NUPRC confirmed it has implemented the directive in the Federation Account, noting appropriate accounting entries have been recorded as approved.
The approval effectively resolves longstanding disputes over NNPC’s historical indebtedness to the Federation, while current liabilities from ongoing operations remain under monitoring for future recovery.
The debt cancellation occurs as the commission struggles to meet revenue targets. NUPRC data showed that against an approved monthly revenue target of N1.204tn for 2025, actual revenue for November reached only N660.04bn, creating a N544.76bn shortfall.
Royalty receipts on oil and gas, comprising the largest portion of upstream income, fell significantly below projections. The approved monthly royalty target was N1.144tn, compared to N605.26bn actually generated in November, reflecting a N538.92bn deficit.
Cumulatively, as of November 30, 2025, NUPRC’s approved revenue target stood at N13.25tn, while actual collections totaled N7.60tn, indicating a N5.65tn revenue shortfall. For royalties specifically, the cumulative approved figure was N12.59tn against N6.96tn realized, leaving a N5.63tn gap.
The document also showed declining revenue performance compared to the previous month, dropping from N873.10bn in October 2025 to N660.04bn in November.
A separate dispute exists between NNPC Limited and Periscope Consulting, the audit firm engaged by the Nigeria Governors’ Forum to investigate alleged under-remittance of $42.37bn (approximately N12.91tn) in oil revenue to the Federation Account between 2011 and 2017.
Fresh submissions from both parties prompted the Federation Account Allocation Committee to order a joint reconciliation exercise to determine accurate remittance records and resolve the protracted dispute.
According to documents reviewed by the FAAC Sub-Committee, NNPC has formally challenged the audit findings, asserting that no outstanding revenue is owed to the Federation Account for the assessed period.
The national oil company maintains that all crude oil proceeds and associated earnings have been fully recorded, rejecting Periscope’s claim of major remittance shortfalls.
Periscope Consulting strongly contests NNPC Limited’s position, maintaining that its audit identified substantial remittance gaps and that the alleged $42.37bn shortfall remains unaddressed.
The report stated: “NNPC Limited submitted their response regarding $42,373,896,555.00 under remittance to the Federation Account as contained in the report of Periscope Consulting. NNPC Limited responded that all revenues due to the Federation have been properly accounted for and no outstanding amounts for the period under review.”
This disagreement has created an impasse, with consultants arguing that the oil company’s explanations contradict audited financial records.
After noting the conflicting positions, the FAAC sub-committee directed NNPC Ltd and Periscope Consulting to conduct a joint session to harmonize records and resolve outstanding issues. The reconciliation exercise remains ongoing.
“Responding, Periscope Consulting disagreed with NNPC Ltd’s position; hence, the Sub-Committee directed that there should be a joint meeting with the two parties to close out on the issue. This assignment is a work in progress,” the report added.
Professor Emeritus of Petroleum Economics Wumi Iledare explained that the alleged $42.37bn under-remittance between 2011 and 2017 reflects longstanding weaknesses in Nigeria’s pre-Petroleum Industry Act operational framework.
He noted that the former Nigerian National Petroleum Corporation operated with overlapping responsibilities that complicated revenue verification and frequently generated disputes. Iledare characterized the situation as a “legacy problem,” emphasizing that such discrepancies can only be prevented through disciplined PIA enforcement, real-time monitoring, and continuous independent auditing.
The World Bank previously accused NNPCL of incomplete oil revenue remittances to the Federation Account, undermining fiscal transparency and macroeconomic stability.
The institution observed that despite commercialization in 2021 to function as a profit-driven entity, the company retains monopolistic control over crude oil sales and foreign exchange inflows, resulting in persistent gaps between declared earnings and actual remittances.
“NNPC Ltd has remained a key source of revenue leakages,” the World Bank stated, urging government authorities to “strengthen oversight, ensure full disclosure of oil proceeds, and improve transparency in federation revenue management.”
The institution noted that the state-owned company has been remitting only 50 percent of revenue gains from Premium Motor Spirit subsidy removal into the Federation Account.
According to the World Bank, from N1.1tn revenue generated from crude sales and other income in 2024, NNPC Ltd remitted only N600bn, leaving N500bn unremitted.
“Despite the subsidy being fully removed in October 2024, NNPC Ltd started transferring the revenue gains to the Federation only in January 2025. Since then, it has been remitting only 50 percent of these gains, using the rest to offset past arrears,” the World Bank stated.
Since taking office, NNPC Ltd Group Chief Executive Officer Bayo Ojulari has consistently pledged to maintain transparency, efficiency, and accountability throughout the company’s operations.
He has repeatedly assured Nigerians and the international investment community that the company’s financial records will be transparent and its transactions with the Federation Account will fully comply with established fiscal regulations.
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