President Bola Tinubu has approved the cancellation of a substantial portion of the debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, resulting in a reduction of approximately $1.42 billion and ₦5.57 trillion after a reconciliation of records.
The approval was contained in a document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November 2025 meeting of the Federation Account Allocation Committee (FAAC).
According to the document titled “Report of October 2025 Revenue Collection Presented at the Federation Account Allocation Committee Meeting Held on 18th November 2025”, the decision followed a comprehensive review of NNPC Ltd’s outstanding obligations to the Federation.
Before the write-off, the debts were reported at $1,480,610,652.58 and ₦6,332,884,316,237.13, covering Production Sharing Contracts (PSC), Direct Sale Direct Purchase (DSDP), Revenue Allocation and Miscellaneous Crude Liftings (RA & MCA), and Joint Venture (JV) and PSC royalty receivables.
Following the Presidential directive, about $1,421,727,723 and ₦5,573,895,769,388.45 of these obligations were cleared. The NUPRC confirmed that 96 per cent of the dollar-denominated debt and 88 per cent of the naira-denominated obligations have been “nil-off”.
The commission stated that it has made all necessary accounting entries to reflect the debt cancellation in the Federation Account.
The write-off covers legacy debts accumulated up to 31 December 2024, effectively resolving long-standing disputes between NNPC Ltd and the Federation. However, the NUPRC noted that fresh obligations incurred in 2025 remain outstanding.
According to the report, statutory obligations from January to October 2025 stand at $56,808,752.32 and ₦1,021,550,672,578.87, relating to PSC & MCA liftings and JV royalty receivables.
The NUPRC said the Presidential approval followed recommendations from the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation, which reviewed royalty and lifting-related liabilities up to the end of 2024.
Despite the clearance of legacy debts, revenue shortfalls continue to affect the Federation Account. The report showed that November 2025 royalty collections stood at ₦605.26 billion, far below the target of ₦1.144 trillion, resulting in a deficit of ₦538.92 billion.
Cumulatively, as of November 30, 2025, total approved revenue was ₦13.25 trillion, while actual collections amounted to ₦7.60 trillion, resulting in a gap of ₦5.65 trillion. For royalties alone, the shortfall stood at ₦5.63 trillion.
The figures also showed a drop in monthly collections compared to October 2025, when ₦873.10 billion was recorded, highlighting ongoing challenges in revenue mobilisation.
The World Bank has previously criticized NNPC Ltd. over gaps between reported earnings and actual remittances, urging stronger oversight and transparency in oil revenue management. The Bank also noted that NNPC Ltd has been remitting only 50 percent of the revenue gains from the removal of the Premium Motor Spirit (PMS) subsidy to the Federation Account.
Meanwhile, the FAAC sub-committee has directed NNPC Ltd and audit firm Periscope Consulting to jointly harmonise records over an alleged $42.37 billion under-remittance between 2011 and 2017, a dispute that remains unresolved.
Despite these concerns, NNPC Ltd reported improved financial performance in recent months. According to its Monthly Report Summary for October 2025, the company recorded revenue of ₦5.08 trillion, up from ₦4.27 trillion in September, while profit after tax rose to ₦447 billion from ₦216 billion.
Earlier, NNPC Ltd announced a profit after tax of ₦5.4 trillion from total revenue of ₦45.1 trillion for the full year ended 2024.
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