Abuja — The Federal Government has approved the write-off of the bulk of legacy debts owed by the Nigerian National Petroleum Company Limited (NNPCL) to the Federation Account, wiping out approximately $1.42 billion and ₦5.57 trillion following a reconciliation exercise sanctioned by President Bola Ahmed Tinubu.
The decision was contained in a regulatory document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November meeting of the Federation Account Allocation Committee (FAAC). The move effectively clears long-standing balances arising from crude oil liftings, production-sharing contracts, and joint venture royalties accumulated up to December 31, 2024.
According to the regulator, the presidential approval followed the recommendations of a Stakeholder Alignment Committee constituted to reconcile disputed claims between the state-owned oil company and the Federation.
“The commission recently received a Presidential Approval to nil off the outstanding obligations of NNPC Ltd as at 31st December 2024 as submitted by the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation,” the document stated
Massive Debt Cleared From Federation Books
Before the reconciliation, outstanding obligations reported to FAAC stood at about $1.48 billion and ₦6.33 trillion. Following the adjustment, the regulator confirmed that the bulk of these balances had been removed from the Federation’s accounts.
“Consequently, out of $1,480,610,652.58 and ₦6,332,884,316,237.13, the affected outstanding obligations that have been nil off are $1,421,727,723.00 and ₦5,573,895,769,388.45. The commission has passed the appropriate accounting entries as approved.”
An analysis of the figures shows that the write-off represents about 96 per cent of the dollar-denominated debt and roughly 88 per cent of the naira obligations previously classified as outstanding.
Officials familiar with the process said the move was aimed at ending years of accounting disputes, eliminating inherited liabilities, and enabling both the Federation and NNPCL to operate with cleaner balance sheets going forward.
2025 Liabilities Still Stand
The debt relief, however, does not extend to liabilities incurred in 2025. The NUPRC disclosed that statutory obligations arising between January and October 2025 remain outstanding.
These include balances of approximately $56.8 million and ₦1.02 trillion, largely linked to lifting-related charges and joint venture royalties.
Part of the dollar obligation has already been recovered. According to the commission:
“The commission received $55,003,997.00 in the month under review from the outstanding, leaving a balance of $1,804,755.32 and ₦1,021,550,672,578.87. The amount received is part of the total collection reported for sharing by the Federation this month.”
Revenue Targets Missed Despite Debt Reset
The write-off comes against the backdrop of weak upstream revenue performance, with data from the same regulatory document revealing that the commission missed its approved monthly revenue target for November by over ₦540 billion.
The shortfall was attributed mainly to lower-than-expected royalty receipts from oil and gas production, while actual collections also declined compared to October figures, highlighting ongoing challenges in Nigeria’s upstream revenue generation.
The development underscores the complex balancing act facing the Tinubu administration — cleaning up inherited fiscal distortions while grappling with production constraints, oil theft, revenue leakages, and underperformance in the energy sector.
While the debt cancellation offers temporary fiscal relief and accounting clarity, analysts say sustained reforms, higher production efficiency, and improved revenue enforcement will be critical to stabilising Federation finances in the months ahead.
Naija247news Staff ✔
Godwin Okafor is the Publisher & CEO of Naija247news Media Group LLC, an independent investigative news platform delivering accurate, data-driven reporting on Nigerian and global politics, economy, finance, and business. Founded in October 2010, Naija247news specializes in developmental journalism, providing timely insights and analysis to readers across Nigeria and the diaspora.
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