The federal government has written off the bulk of legacy debts owed by the Nigerian National Petroleum Company Ltd. (NNPCL) to the federation account, cancelling about US$1.42 billion and US$12.1 billion (₦5.57 trillion) following a reconciliation exercise approved by President Bola Tinubu.
The decision, documented by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November meeting of the Federation Account Allocation Committee (FAAC), clears longstanding balances linked to crude oil liftings, production-sharing contracts, and joint venture royalties accumulated up to the end of 2024.
The write-off followed a review by a stakeholder committee tasked with reconciling historical claims between NNPC and the federal government. NUPRC said the presidential approval formally “nil off the outstanding obligations of NNPdebt
C Ltd as at 31 December 2024,” as submitted by the Stakeholder Alignment Committee.
Before the adjustment, the outstanding obligations reported to FAAC stood at roughly US$1.48 billion and US$13.8 billion (₦6.33 trillion). The reconciliation removed US$1.42 billion (96 percent) of the dollar-denominated debt and US$12.1 billion (88 percent) of naira obligations from the federation’s books. Appropriate accounting entries were passed to reflect the write-off.
Officials familiar with the process said the move was intended to resolve years of disputes over historical claims and allow both sides to start afresh with cleaner balance sheets.
The cancellation, however, does not apply to liabilities incurred in 2025. Statutory obligations arising between January and October this year remain on the books, with balances of about US$123.5 million (₦56.8 billion) and US$2.2 billion (₦1.02 trillion) tied to lifting-related charges and joint venture royalties. Part of the dollar component US$55 million was recovered during the period under review, leaving residual balances of US$1.8 million and US$2.2 billion.
The debt relief comes amid continued shortfalls in upstream revenue collections. NUPRC data show that approved monthly revenue for November fell more than US$1.17 billion (₦540 billion) below target, largely due to weaker-than-expected royalty receipts from oil and gas production. Actual collections also declined from October levels, highlighting ongoing challenges in meeting fiscal expectations from the petroleum sector.
By wiping out historical debt, the federal government and NNPC aim to provide a fresh start for the upstream sector, streamline financial reporting, and improve transparency in oil revenue sharing critical steps as Nigeria continues to rely heavily on oil for foreign currency and fiscal receipts.
The write-off is part of broader efforts to reconcile state-owned oil company accounts with the federation, strengthen regulatory oversight, and enhance the efficiency of revenue management within the sector.
Analysts say clearing historical debt may also reduce legal and operational uncertainties for both the government and NNPC, paving the way for improved investment confidence and more predictable revenue flows in the coming years.
