President Bola 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, effectively writing off about $1.42 billion and N5.57 trillion following an extensive reconciliation exercise.
The decision is contained in a document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November 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,” provides the clearest picture yet of the long-standing dispute over NNPC’s legacy obligations to the Federation.
According to the NUPRC, debts earlier reported to FAAC in October 2025 stood at $1.48 billion and N6.33 trillion, arising from production sharing contracts, direct sale and direct purchase arrangements, royalty arrears and joint venture obligations. However, following presidential approval, the bulk of these balances have now been removed from the Federation’s books.
The commission disclosed that the approval was based on the recommendations of the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation, which reviewed the national oil company’s royalty and lifting-related liabilities up to December 31, 2024.
A breakdown of the figures shows that about 96 per cent of the dollar-denominated debt and roughly 88 per cent of the naira obligations were written off. The NUPRC confirmed that it had already implemented the directive, noting that the appropriate accounting entries had been passed in line with the approval.
Despite the clearance of the legacy balances, the regulator noted that fresh liabilities accumulated in 2025 remain outstanding. Statutory obligations incurred between January and October 2025 were put at $56.8 million and N1.02 trillion, although part of the dollar component has been recovered, leaving a balance of about $1.8 million.
While the debt cancellation has resolved a long-running accounting dispute between NNPC Ltd and the Federation, it comes against the backdrop of mounting revenue pressures. Data in the same NUPRC document show that the commission fell significantly short of its revenue targets in November 2025, recording N660.04 billion against a monthly projection of N1.204 trillion.
Royalty collections, which form the backbone of upstream oil and gas revenue, also underperformed, with a shortfall of over N538 billion for the month. Cumulatively, as of November 2025, total revenue collections stood at N7.60 trillion against an approved target of N13.25 trillion, leaving a gap of N5.65 trillion.
The development also unfolds amid renewed controversy over alleged under-remittance of oil revenues. A dispute between NNPC Ltd and Periscope Consulting, the audit firm engaged by the Nigeria Governors’ Forum, over an alleged $42.37 billion under-remittance between 2011 and 2017 remains unresolved. While NNPC has rejected the audit findings, insisting that all revenues were fully accounted for, the consultants have maintained that substantial gaps persist.
FAAC has since directed both parties to undertake a joint reconciliation to harmonise records and close out the matter.
Energy economists have described the controversy as a legacy issue rooted in structural weaknesses that predated the Petroleum Industry Act, stressing that stricter oversight, real-time monitoring and independent audits are essential to prevent a recurrence.
The World Bank has also raised concerns about revenue leakages, urging the Federal Government to strengthen transparency and oversight in the management of oil proceeds.
