Nearly a year after President Bola Tinubu scrapped petrol subsidies, the World Bank has disclosed that the Nigerian National Petroleum Company (NNPC) Limited is remitting just 50 percent of the revenue generated from the subsidy removal to the federation account — a development that now raises fresh questions about the transparency of Nigeria’s most critical revenue stream.
In its latest Nigeria Development Update released Monday, the World Bank noted that the NNPC only began remitting the fuel subsidy savings in January 2025, despite the president’s announcement of the subsidy removal in May 2023. The bank said the state oil firm is using the remaining 50 percent of the revenue to settle what it describes as past arrears, without clarifying the nature or origin of those debts.
“Despite the subsidy being fully removed in October 2024, NNPCL started transferring the revenue gains to the Federation only in January 2025,” the World Bank said. “Since then, it has been remitting only 50 percent of these gains, using the rest to offset past arrears.”
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The revelation has added to public skepticism about the federal government’s claim that subsidy removal was a fiscal turning point for Nigeria, especially when millions of Nigerians continue to face worsening inflation, high transport costs, and mounting hardship.
The World Bank’s report aligns with recent concerns raised by the International Monetary Fund (IMF), which in April called on Nigerian authorities to “increase transparency” in the oil sector, particularly in how funds from subsidy removal are managed.
“We have been commending bold reforms by the government, but we need to see a little more transparency in the oil sector to ensure that fuel subsidy removal can result in more flow of resources into government coffers,” an IMF official said during a press briefing last month.
According to the World Bank, the full revenue from subsidy removal could amount to as much as 2.6 percent of Nigeria’s GDP in 2024. However, it cautioned that unless these funds are completely transferred to the federation, the core goals of fiscal reform would be undermined. The bank emphasized that full remittance is critical for “sound fiscal management” and to prevent a slide back into deficit-driven spending.
NNPC Faces Forensic Audit, Anti-Graft Probe
The report comes just weeks after President Tinubu sacked the board of the NNPC Ltd amid growing public outcry over corruption allegations. Among those removed were former Group Chief Executive Officer Mele Kyari and board chairperson Pius Akinyelure. The president has since appointed Bayo Ojulari as the new GCEO and Ahmadu Kida as the non-executive chairman, in a shake-up aimed at cleaning house.
The NNPC is also under forensic audit, following years of alleged financial mismanagement that watchdog groups and government critics say have bled the country’s most lucrative industry. The Economic and Financial Crimes Commission (EFCC) is currently investigating top former officials of the oil company.
A letter obtained by Premium Times and dated 28 April, with reference number CR:3000/EFCC/ABJ/HQ/SDC.2/NNPC/VOL.1/698, requested the company’s management to submit certified salary and allowance records for 14 officials, including those who have retired.
This investigation includes former NNPC CEOs Mele Kyari and Abubakar Yar’Adua, both accused of abusing office and misappropriating funds during their respective tenures.
Lingering Transparency Questions Over Subsidy Funds
When Tinubu announced the end of the petrol subsidy during his inaugural address in May 2023, the move was lauded as a courageous step to plug Nigeria’s fiscal holes. However, the delay in NNPC’s remittance and the lack of public clarity about how the revenue is being used have led to mounting suspicion, especially as the government’s claim to have removed subsidies was belied by its reappearance through indirect means.
This backdrop has compounded the opacity surrounding NNPC’s arrears and deductions, becoming a growing point of tension between the government and its international partners.
World Bank Warns on Budget Risks and Rising State Revenues
Beyond oil revenue, the World Bank also flagged fiscal risks in the implementation of Nigeria’s 2025 budget, warning that overly ambitious revenue projections could result in a wider-than-expected budget deficit. While the federal government aims to increase capital spending, the World Bank urged caution, recommending that any such moves be anchored in a broader fiscal consolidation framework.
“The budget aims to boost capital spending, and this must be done sustainably, within the broader objective of fiscal consolidation to complement monetary policy and achieve an overall policy mix that maintains fiscal discipline and brings down inflation,” the report said.
It added that states, not just the federal government, have a major role to play in ensuring efficient expenditure and transparent governance. Notably, the report highlighted that state governments received a combined N13.8 trillion in 2024, more than the federal government’s N12.3 trillion share.
With these figures, the World Bank noted that improving service delivery, closing infrastructure gaps, and cutting waste would depend not only on more revenue but also on how that revenue is spent.
The latest disclosure puts President Tinubu’s administration in a tight spot. While the president continues to tout subsidy removal as a necessary reform, the inability to fully account for the gains raises uncomfortable questions about the sincerity of the government’s fiscal plans and whether the gains are being diverted before they ever reach the national treasury.