By Wellington Jopelo
The Federal Government has approved the removal of massive legacy debts owed by the Nigerian National Petroleum Company Limited (NNPCL) to the Federation Account, wiping off about $1.42bn and N5.57tn after a detailed reconciliation exercise.
Documents from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), presented at the November 2025 Federation Account Allocation Committee (FAAC) meeting, showed that the Presidency authorised the adjustment following recommendations by a multi-agency reconciliation panel.
Before the approval, NNPC’s outstanding liabilities—arising from crude oil liftings, production sharing contracts, joint venture royalties and related transactions—were valued at about $1.48bn and N6.33tn. The new directive removed the bulk of these figures from government records, leaving only a small fraction outstanding.
According to the regulator, the write-off covered debts accumulated up to December 31, 2024, and reflected agreements reached by the Stakeholder Alignment Committee set up to harmonise claims between NNPC and the Federation. The NUPRC confirmed that the necessary accounting adjustments have already been effected.
However, the clearance does not extend to obligations incurred in 2025. The commission disclosed that liabilities generated between January and October 2025 still amounted to over $56m and N1.02tn, although more than $55m of the dollar component was recovered during the review period.
The debt cancellation comes against the backdrop of weak revenue performance by the upstream regulator. Data from the FAAC report showed that in November 2025, collections fell far short of projections, with actual inflows of N660bn compared to a monthly target exceeding N1.2tn. Royalty receipts accounted for most of the shortfall.
Cumulatively, the NUPRC recorded trillions of naira in revenue gaps for 2025, underscoring the pressure on government finances despite the resolution of NNPC’s legacy debts.
The report also highlighted the unresolved dispute between NNPC Ltd and Periscope Consulting over claims of a $42.37bn under-remittance to the Federation Account between 2011 and 2017. While NNPC maintains that all revenues were duly remitted, the consulting firm insists significant discrepancies remain. FAAC has directed both sides to reconcile their figures.
Commenting on the issue earlier, petroleum economics expert Prof. Wumi Iledare described the controversy as a product of structural weaknesses that existed before the Petroleum Industry Act, noting that stronger governance and continuous audits are needed to prevent similar disputes.
International institutions, including the World Bank, have also raised concerns over revenue transparency at NNPC, urging tighter oversight and fuller disclosure of oil earnings.
NNPC’s management has repeatedly stated that reforms are ongoing and pledged to improve accountability, assuring stakeholders that the company’s financial dealings with the Federation will remain transparent going forward.