President Bola Tinubu
Abayomi Susan
President Bola Tinubu has approved the cancellation of $1.42 billion and N5.57 trillion in debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account. This decision was made after a reconciliation of records between NNPC Ltd and the Federation, covering liabilities up to December 31, 2024.
The write-off includes obligations from production-sharing contracts, domestic supply obligations, repayment agreements, modified carry arrangements, and joint venture royalties. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), this cancellation represents about 96% of the dollar-denominated debt and 88% of the naira-denominated obligations previously reported as outstanding.
The approval follows recommendations from the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation. The committee reviewed the company’s royalty and lifting-related liabilities up to December 31, 2024. Despite this debt cancellation, fresh obligations incurred in 2025 remain outstanding, totaling $56,808,752.32 and N1,021,550,672,578.87 for PSC & MCA liftings and JV royalty receivables, respectively.
The NUPRC has confirmed that the necessary accounting entries have been passed to reflect the debt relief in the Federation Account. This move aims to increase transparency in Nigeria’s oil sector and align fiscal ties between the state energy giant and the government, which is heavily reliant on crude revenue.
However, a long-running dispute over an alleged $42.37 billion under-remittance by NNPC Ltd between 2011 and 2017 remains unresolved. NNPC Ltd insists that all revenues were properly accounted for, rejecting the claims.
The debt write-off comes amid efforts to reform NNPC Ltd and improve transparency in the management of public revenues. The World Bank has previously criticized NNPC Ltd for revenue leakages and remittance gaps, urging stronger oversight and transparency.
