‎FG cancels majority of NNPC Ltd’s debt after reconciliation

The Federal Government has approved the cancellation of a large portion of historic debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, according to a revenue report presented at a recent Federation Account Allocation Committee meeting.
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‎The directive signed by President Bola Tinubu wipes off about $1.42 billion and N5.57 trillion worth of obligations, representing the bulk of previously reported legacy debts accumulated up to December 31, 2024.
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‎That decision follows a comprehensive reconciliation of accounts between NNPC Ltd and the Federal Government facilitated by a stakeholder alignment committee.
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‎According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the debts earlier recorded — totaling roughly $1.48 billion in foreign-currency obligations and N6.33 trillion in naira liabilities — have now largely been removed from the Federation’s books.
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‎The write-offs amount to approximately 96 % of the dollar debt and 88 % of the naira debt previously recorded.
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‎The approval followed recommendations from the reconciliation committee, which reviewed outstanding royalty and lifting-related liabilities as part of ongoing efforts to tidy up decades-old accounting discrepancies between the national oil company and government revenue records.
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‎However, the NUPRC noted that new obligations arising in 2025 remain on the books. As of October this year, NNPC Ltd still owed the Federation Account roughly $56.8 million and about N1.02 trillion from ongoing production-linked statutory dues, though part of the dollar portion was recovered during the reporting period.
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‎Revenue Shortfalls Highlight Ongoing Challenges
‎While the cancellation is expected to clear the books of contentious legacy balances, it comes amid concerns about shortfalls in upstream revenue collections. The report showed that for November 2025, actual collections from oil royalties and other upstream receipts fell significantly below targets, recording N660.04 billion against a N1.204 trillion projection. Cumulative performance for the year also lagged, widening the gap between expectations and actual inflows.
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‎Context of Long-Standing Disputes
‎The write-off follows prolonged disagreements over NNPC Ltd’s remittances to the Federation Account. A recent audit by Periscope Consulting, commissioned by the Nigeria Governors’ Forum, alleged under-remittances totalling $42.37 billion spanning 2011 to 2017 — claims rejected by NNPC Ltd. The conflicting positions have prompted ongoing joint reconciliation efforts to harmonise accounts and close out outstanding issues.
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‎What It Means Going Forward
‎The debt write-off is largely an accounting and governance reset, designed to resolve legacy disputes and sharpen clarity in the nation’s oil revenue records. It does not eliminate current or future obligations arising from NNPC Ltd’s ongoing operations, which will continue to be monitored and collected according to fiscal rules.
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‎As Nigeria works to improve transparency and strengthen revenue flows from its oil sector, stakeholders say continued independent audit and real-time reconciliation — backed by institutional reforms — will be critical to preventing the recurrence of such disputes.