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 off about $1.42bn and N5.57tn following a reconciliation exercise between both parties.
The approval is contained 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,” was obtained by The PUNCH on Sunday.
According to the document, debts previously reported at the October 2025 FAAC meeting stood at $1.48bn and N6.33tn, covering obligations from production sharing contracts, direct sale–direct purchase arrangements, refinery agreements, modified carry agreements, joint ventures and royalty receivables.
However, the NUPRC disclosed that the Presidency had approved the removal of most of these balances from the Federation’s books. The commission stated that it had received presidential approval to “nil off” NNPC Ltd’s outstanding obligations as at December 31, 2024, based on the recommendations of the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation.
A breakdown of the figures shows that $1.42bn and N5.57tn were cancelled, representing about 96 per cent of the dollar-denominated debt and 88 per cent of the naira-denominated obligations earlier reported. The regulator confirmed that it had already passed the necessary accounting entries in line with the approval.
Despite the clearance of legacy balances, fresh liabilities incurred in 2025 remain outstanding. The NUPRC said statutory obligations arising between January and October 2025 stood at $56.81m and N1.02tn. Of this, $55m was recovered during the month under review, leaving a balance of $1.8m and N1.02tn to be tracked for future recovery.
The debt cancellation comes amid broader concerns over revenue performance. Data in the same document showed that against an approved monthly revenue target of N1.204tn for 2025, the NUPRC recorded only N660.04bn in November, resulting in a shortfall of N544.76bn. Royalty collections were particularly weak, with N605.26bn realised against a target of N1.144tn.
Cumulatively, approved revenue for the year stood at N13.25tn as of November 30, while actual collections were N7.60tn, leaving a gap of N5.65tn. The report also showed a decline in collections from October’s N873.10bn to November’s N660.04bn.
The development unfolds against the backdrop of a long-running dispute over alleged under-remittance of oil revenues by NNPC Ltd between 2011 and 2017, estimated at $42.37bn. While NNPC has rejected the audit findings by Periscope Consulting, hired by the Nigeria Governors’ Forum, FAAC has mandated a joint reconciliation to resolve the impasse.
Analysts say the cancellation of legacy debts may help clear historical bottlenecks, but persistent revenue shortfalls and unresolved disputes continue to raise questions about transparency and fiscal sustainability in Nigeria’s oil sector.
