President Bola Tinubu has approved the write-off of a significant portion of outstanding debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, amounting to about $1.42 billion and N5.57 trillion.
The decision was disclosed in a report by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on revenue collections, which was presented at the Federation Account Allocation Committee (FAAC) meeting held in November 2025. The approval covers legacy obligations accumulated up to December 31, 2024, effectively resolving long-standing reconciliation issues between NNPC Ltd and the Federation.
According to the report, total outstanding obligations previously recorded stood at over $1.48 billion and N6.33 trillion, linked to production sharing contracts, crude oil liftings, and joint venture royalty receivables. Following the presidential directive, the bulk of these liabilities has been removed from the Federation Account, with the necessary accounting adjustments completed.
The NUPRC explained that the debt cancellation followed recommendations from a Stakeholder Alignment Committee established to reconcile historical indebtedness between NNPC Ltd and the Federation. The committee reviewed royalty and lifting-related obligations up to the end of 2024 before submitting its findings to the presidency.
However, the clearance does not extend to obligations arising in 2025. The report shows that statutory liabilities accumulated between January and October 2025 remain outstanding, with obligations running into tens of millions of dollars and over one trillion naira. These liabilities are expected to remain under active monitoring.
The data also highlights continued pressure on government oil revenue. Royalty collections have consistently fallen below budgeted levels, with November 2025 receipts significantly missing projections. Cumulative revenue collections as of the end of November were substantially lower than approved targets, underscoring persistent gaps in revenue mobilisation.
While the debt write-off removes a major source of friction between NNPC Ltd and the Federation and clears most historical obligations, analysts note that structural challenges in oil and gas revenue generation remain unresolved. They say stronger fiscal oversight and improved monitoring of NNPC Ltd’s operations will be crucial to preventing a build-up of new liabilities.
Meanwhile, NNPC Ltd has reported improved financial performance in recent months. The company posted higher revenues and profits in October 2025 compared with the previous month and has previously disclosed strong earnings for the 2024 financial year, reflecting gains in operational efficiency despite ongoing sector challenges.
