FG Wipes Out $1.42 bn, N5.57 trn NNPC Debt in Bold Fiscal Reform
President Bola Tinubu has approved the cancellation of a massive portion of the debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, wiping out about $1.42 billion and N5.57 trillion after a reconciliation of records between the two entities.
The decision was contained in a document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November 2025 meeting of the Federation Account Allocation Committee (FAAC) .
The write‑off follows a comprehensive review of NNPC’s outstanding obligations, which had been reported at $1,480,610,652.58 and N6,332,884,316,237.13 for Production Sharing Contracts (PSC), Direct Sale Direct Purchase (DSDP), Revenue Allocation and Miscellaneous Crude Liftings (RA & MCA), and Joint Venture and PSC royalty receivables.
The Presidency has now cleared the bulk of these balances, with the NUPRC confirming that 96 % of the dollar‑denominated debt and 88 % of the naira‑denominated obligations have been “nil‑off” .
The cancellation is part of a broader effort to resolve long‑standing disputes over NNPC’s legacy indebtedness. The NUPRC noted that while the legacy debts have been largely cleared, fresh obligations incurred between January and October 2025 remain outstanding, totaling $56,808,752.32 and N1,021,550,672,578.87 for PSC & MCA liftings and JV royalty receivables respectively .
The commission has already passed the necessary accounting entries to reflect the debt relief in the Federation Account .
The decision has sparked debate over its fiscal impact. While the write‑off provides immediate relief to NNPC, it reduces the distributable revenue pool for the Federation Account, potentially squeezing allocations to states and local governments.
Analysts warn that the move could exacerbate revenue shortfalls at the sub‑national level, especially as the country grapples with rising public debt and fiscal pressures .
The World Bank has previously criticized NNPC for persistent gaps between reported earnings and actual remittances, urging stronger oversight and transparency in the management of oil revenues.
The bank also highlighted that NNPC has been remitting only 50 % of revenue gains from the removal of the Premium Motor Spirit subsidy to the Federation Account, underscoring the need for improved fiscal discipline.
The FAAC sub‑committee has directed NNPC Ltd and audit firm Periscope Consulting, which flagged an alleged $42.37 billion under‑remittance between 2011 and 2017, to meet jointly and harmonize records. This dispute remains unresolved, and the reconciliation process is ongoing .
President Tinubu’s approval to write off $1.42 billion and N5.57 trillion of NNPC’s legacy debt marks a significant step toward settling historical financial disputes, but it also raises concerns about short‑term revenue losses for states and the broader fiscal health of the federation. #FG Wipes Out $1.42 bn, N5.57 trn NNPC Debt in Bold Fiscal Reform#
