President Bola Tinubu has approved the cancellation of about $1.42 billion and N5.57 trillion in outstanding debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, a move that significantly reshapes the fiscal relationship between the state-owned oil firm and the federal government.
The approval was contained in a document issued by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the Federation Account Allocation Committee (FAAC) meeting held in November 2025. The development was disclosed in a statement published on Monday on the official X page of the Presidency.
“President Bola Ahmed Tinubu has approved the cancellation of a substantial portion of NNPC Ltd’s outstanding debts owed to the Federation Account, effectively wiping out approximately $1.42 billion in legacy obligations,” the statement said.
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Scope of the debt cancellation
According to the document, the cancelled liabilities relate to legacy obligations incurred by NNPC Ltd up to December 31, 2024. These include debts arising from production sharing contracts (PSCs), domestic crude oil supply obligations, repayment agreements, modified carry arrangements, as well as joint venture and PSC royalty receivables owed to the Federation.
The presidency said the decision followed recommendations by the Stakeholder Alignment Committee, which was established to reconcile long-standing debts between NNPC Ltd and the Federation Account. It added that the necessary accounting adjustments have already been effected to reflect the write-off.
However, the government clarified that obligations incurred between January and October 2025 were excluded from the cancellation. Those debts remain outstanding and are being actively tracked and recovered.
Reform push amid scrutiny
The debt write-off comes as the Tinubu administration continues reforms in the oil and gas sector, aimed at resolving legacy financial issues, stabilizing public revenues and improving transparency at NNPC Ltd, which was commercialized under the Petroleum Industry Act.
In recent years, the national oil company has faced sustained criticism over governance, transparency and accountability, particularly amid Nigeria’s fuel supply challenges and declining oil output.
The latest report by the Auditor-General of the Federation, published in September and recently submitted to the National Assembly, highlighted what it described as systemic violations of financial regulations within NNPC Ltd. The audit cited weak internal controls, unexplained payments and irregularities linked to controversial contracts.
The report accused the company of fund misappropriation, inflated contracts, irregular payments and failure to deduct and remit statutory taxes.
One example cited was NNPC’s failure to deduct the statutory one percent stamp duty on payments totaling N24.7 billion and $52.98 million made to contractors and service providers. According to the audit, this resulted in unpaid taxes of N247 million and $529,863. The anomalies, which occurred between 2020 and 2021, involved more than $51 million in questionable settlements.
Unresolved under-remittance dispute
The NUPRC document presented at FAAC also referenced a separate and long-running dispute over an alleged under-remittance of $42.37 billion between 2011 and 2017. That claim, which has featured in previous audits and legislative reviews, remains unresolved.
NNPC Ltd has consistently rejected the allegation, insisting that all revenues due to the Federation during the period were properly accounted for.
“A separate, long-running dispute over an alleged under-remittance of $42.37 billion (2011–2017) remains unresolved, with NNPC Ltd rejecting the claims and insisting all revenues were properly accounted for,” the presidency said.
The debt cancellation eases pressure on NNPC Ltd’s balance sheet and could improve cash flow for the commercialized entity, but it also raises fresh questions about accountability and the long-term handling of public oil revenues. Analysts say the move underscores the scale of legacy financial entanglements in Nigeria’s energy sector, even as the government pushes for stricter oversight and reform.
The challenge for the Tinubu administration now lies in ensuring that new obligations do not add to the pile of unresolved debts, while outstanding audit issues and disputes over past remittances are conclusively addressed.