Fresh Start For NNPC as FG Cancels N5.57 Trillion, $1.42 Billion Legacy Debt
- Federal government cancels $1.42 billion and N5.57 trillion debts of NNPCL, aiming for a financial reset
- Reconciliation ends long-standing disputes over historical claims between NNPCL and the federal government
- Upstream revenue collections fall short, revealing ongoing challenges despite significant debt write-off
The federal government has written off a substantial portion of legacy debts owed by the Nigerian National Petroleum Company Limited (NNPCL) to the federation account, cancelling about $1.42 billion and N5.57 trillion after a comprehensive reconciliation exercise approved by President Bola Tinubu.
The decision, detailed in a regulatory document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), was presented at the November meeting of the Federation Account Allocation Committee (FAAC).
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It effectively wipes out long-standing balances linked to crude oil liftings, production-sharing contracts and joint venture royalty obligations accumulated up to December 31, 2024.
Reconciliation ends years of disputes
According to the regulator, the write-off followed the work of a stakeholder committee set up to reconcile competing claims between NNPCL and the federal government.
The committee reviewed historical records and outstanding balances before submitting its recommendations for presidential approval.
In the document, the commission stated that it had received authorisation to completely clear the debts submitted by the Stakeholder Alignment Committee.
As a result, the obligations previously recorded as outstanding on the federation’s books were largely removed.
Scale of the write-off
Before the adjustment, NNPCL’s outstanding obligations reported to FAAC stood at approximately $1.48 billion and N6.33 trillion.
Following the reconciliation, $1.421 billion and N5.57 trillion of those amounts were cancelled, and appropriate accounting entries were passed.
An analysis of the figures shows that about 96% of the dollar-denominated debt and roughly 88% of the naira obligations were written off.
Officials familiar with the process say the move is aimed at closing the chapter on years of disputes over historical claims and allowing both sides to operate with cleaner balance sheets going forward.
2025 liabilities still stand
The relief, however, does not cover obligations incurred in 2025. The NUPRC disclosed that statutory liabilities arising between January and October this year remain outstanding, with balances of about $56.8 million and N1.02 trillion related mainly to crude lifting charges and joint venture royalties.
Part of the dollar component has already been recovered. The regulator confirmed that $55 million was received during the review period, leaving a residual balance of about $1.8 million alongside the naira obligations.
The recovered amount was included in the revenue shared by the federation for the month under review.
Revenue targets still under pressure
The debt cancellation comes at a time when upstream revenue collections are falling short of expectations.
According to a report by BusinessDay, data contained in the same document show that the commission missed its approved monthly revenue target for November by more than N540 billion.
The shortfall was driven largely by weaker-than-expected royalty receipts from oil and gas production, with actual collections also declining compared to October levels.
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While the debt write-off offers a financial reset for NNPCL and the federation, the revenue gap highlights the continued challenges facing Nigeria’s upstream oil and gas sector.
Overall, the move marks a significant financial reset for the national oil company, even as attention shifts to boosting production, improving compliance and strengthening revenue flows in the months ahead.
ICPC scores NNPC zero in new integrity ranking
Legit.ng earlier reported that Nigeria’s anti-corruption drive has come under renewed scrutiny following a low assessment of the Nigerian National Petroleum Company Limited, NNPCL, by the Independent Corrupt Practices and Other Related Offences Commission.
In its 2025 Ethics and Integrity Compliance Scorecard, the ICPC scored NNPCL zero, placing the national oil company at the very bottom of 357 federal ministries, departments and agencies evaluated nationwide.
The outcome has reignited concerns about governance, transparency and accountability in some of Nigeria’s most strategic public institutions, particularly within the oil and gas sector that remains central to the country’s economic survival.
Source: Legit.ng
