The Federal Government has approved the cancellation of a large portion of debts owed by the Nigerian National Petroleum Company Limited to the Federation Account, wiping off about $1.42 billion and N5.57 trillion. The approval followed a detailed reconciliation of records between both parties.
The decision was disclosed in a report prepared by the Nigerian Upstream Petroleum Regulatory Commission and presented at the November meeting of the Federation Account Allocation Committee. The document confirmed that the Presidency authorised the removal of most of NNPC’s legacy obligations as of December 31, 2024.
Before the adjustment, NNPC’s outstanding liabilities stood at about $1.48 billion and N6.33 trillion, covering crude liftings, production sharing contracts, direct sale–direct purchase arrangements and joint venture royalties. The reconciliation resulted in the cancellation of roughly 96 per cent of the dollar debt and 88 per cent of the naira obligations.
The NUPRC said the write-off followed recommendations by the Stakeholder Alignment Committee, which reviewed historical royalty and lifting-related balances. The commission confirmed it had already passed the approved accounting entries in the Federation Account.
Despite the clearance of legacy debts, fresh obligations accumulated in 2025 remain unresolved. The regulator disclosed that between January and October 2025, NNPC incurred new liabilities of about $56.8 million and N1.02 trillion. While $55 million was recovered during the review period, a balance of $1.8 million and the full naira amount remains outstanding.
The development comes amid mounting revenue challenges. NUPRC data showed that actual revenue collection for November 2025 fell sharply below target. Against a monthly projection of N1.20 trillion, only N660.04 billion was realised, leaving a deficit of N544.76 billion.
Royalty earnings were the hardest hit, with collections of N605.26 billion against an expected N1.14 trillion. Cumulative figures as of November revealed a revenue gap of N5.65 trillion for the year.
The debt write-off also unfolds against a backdrop of unresolved disputes over alleged historical under-remittance of oil revenues. An ongoing disagreement between NNPC and Periscope Consulting over a claimed $42.37 billion shortfall from 2011 to 2017 remains under reconciliation following FAAC intervention.
While NNPC maintains that all revenues were fully accounted for, auditors insist significant gaps persist. The reconciliation process is ongoing.
