President Bola Tinubu has approved the cancellation of a significant portion of debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, wiping out approximately $1.42 billion and N5.57 trillion following a reconciliation of records between the parties.

This development is outlined in a document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November meeting of the Federation Account Allocation Committee (FAAC).

The report, titled “Report of October 2025 Revenue Collection Presented at the Federation Account Allocation Committee Meeting Held on 18th November 2025,” revealed that the debts previously reported in October 2025 amounted to $1,480,610,652.58 and N6,332,884,316,237.13 for PSC, DSDP, RA & MCA Liftings and JV & PSC Royalty Receivables, respectively.

Following a review, the Presidency approved the removal of most of these balances from the Federation’s books. The NUPRC stated, “The commission recently received 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.”

A breakdown of the canceled balances shows that $1,421,727,723.00 and N5,573,895,769,388.45 have been written off, representing roughly 96% of the dollar-denominated debt and 88% of the naira-denominated obligations. Appropriate accounting entries have been passed to reflect the cancellation.

The approval followed recommendations from the Stakeholder Alignment Committee, which reviewed NNPC’s royalty and lifting-related liabilities up to December 31, 2024. While the legacy debts have been cleared, fresh debts incurred in 2025 remain. Between January and October 2025, statutory obligations stood at $56,808,752.32 and N1,021,550,672,578.87 for PSC & MCA Liftings and JV Royalty Receivables, respectively.

Part of the dollar component has been collected, with $55,003,997.00 received in the review period, leaving a balance of $1,804,755.32. The NUPRC has implemented the directive in the Federation Account, ensuring full accounting of the cleared obligations.

The move resolves long-standing disputes over NNPC’s legacy debts, although current liabilities from ongoing operations continue to be monitored for future recovery.

However, revenue collections have fallen short of projections. Against a 2025 approved monthly target of N1.204 trillion, only N660.04 billion was collected in November, leaving a shortfall of N544.76 billion. Oil and gas royalties, which make up the bulk of upstream revenues, recorded N605.26 billion, below the approved target of N1.144 trillion, creating a deficit of N538.92 billion.

Cumulatively, as of November 30, 2025, the NUPRC’s approved total revenue stood at N13.25 trillion, while actual collections were N7.60 trillion, leaving a shortfall of N5.65 trillion. For royalties alone, cumulative approved collections were N12.59 trillion against actual receipts of N6.96 trillion, leaving a gap of N5.63 trillion. Compared to October 2025, revenue also dropped from N873.10 billion to N660.04 billion in November.

Separately, a dispute persists over an alleged $42.37 billion under-remittance of oil revenue to the Federation Account between 2011 and 2017. NNPC maintains that all revenues during this period were fully accounted for, rejecting the audit findings, while consulting firm Periscope Consulting insists significant gaps remain.

The FAAC Sub-Committee has directed a joint reconciliation session to harmonize records and resolve the impasse. Experts note that the under-remittance reflects legacy challenges in Nigeria’s pre–Petroleum Industry Act (PIA) framework, where overlapping roles and poor oversight complicated revenue accounting. They emphasize that adherence to the PIA, real-time monitoring, and independent audits are key to preventing similar disputes.

The World Bank has also highlighted gaps in NNPC Ltd’s remittances, citing incomplete transfers of oil revenue to the Federation Account even after corporatization in 2021. In 2024, for instance, only N600 billion of the N1.1 trillion revenue from crude sales and other income was remitted, leaving a deficit of N500 billion.

Since taking office, NNPC Ltd’s Group CEO, Bayo Ojulari, has pledged transparency, efficiency, and full compliance with fiscal rules in managing the company’s operations and remittances to the Federation Account.