President Bola Tinubu has approved the cancellation of a substantial portion of legacy debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, wiping off approximately $1.42 billion and N5.57 trillion accumulated up to December 31, 2024.
The approval is contained in a document by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) titled “Report of October 2025 Revenue Collection Presented at the Federation Account Allocation Committee (FAAC) Meeting Held on 18th November 2025.”
According to the report, the Presidential directive effectively resolves long-standing disputes between NNPC Ltd and the Federation over royalty, lifting, and related statutory obligations, while liabilities arising from 2025 operations remain subject to ongoing reconciliation and monitoring.
Under the section “Recovery from NNPC Ltd Outstanding Obligations,” the NUPRC disclosed that debts earlier reported at the October 2025 FAAC meeting stood at $1.48 billion and N6.33 trillion, relating to Production Sharing Contracts (PSC), Direct Sale Direct Purchase (DSDP), Royalty Adjustment (RA), Modified Carry Arrangement (MCA) liftings, as well as Joint Venture (JV) and PSC royalty receivables.
Following the Presidential approval, $1.42 billion and N5.57 trillion of these obligations were officially cancelled. The commission confirmed that all accounting entries reflecting the debt write-off have been fully implemented in the Federation Account.
The NUPRC explained that the decision followed recommendations from the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation, which reviewed royalty- and lifting-related liabilities up to the end of 2024.
Despite the clearance of legacy debts, the report noted that fresh obligations accumulated in 2025 remain outstanding. Statutory liabilities from January to October 2025 amount to $56.81 million for PSC and MCA liftings, alongside N1.02 trillion in JV royalty receivables.
Revenue performance continues to pose a challenge. Monthly royalty collections have consistently fallen below projections, with November 2025 receipts of N605.26 billion against a target of N1.14 trillion, resulting in a shortfall of N538.92 billion. Cumulatively, as of November 30, 2025, total approved revenue stood at N13.25 trillion, while actual collections reached N7.60 trillion, leaving a gap of N5.65 trillion. Royalty collections alone accounted for N5.63 trillion of the deficit.
The decline is notable compared to October 2025, when N873.10 billion was collected, underscoring persistent weaknesses in revenue mobilisation despite the resolution of historical debts.
Overall, the Presidential intervention eliminates nearly 96 per cent of dollar-denominated and 88 per cent of naira-denominated legacy obligations, marking a significant step toward stabilising relations between NNPC Ltd and the Federation Account.
However, analysts note that while the move provides fiscal relief and clears historical disputes, structural issues in oil and gas revenue collection remain unresolved. With 2025 liabilities continuing to accrue and royalties repeatedly missing targets, calls have intensified for stronger fiscal oversight and more robust monitoring of NNPC Ltd’s operations.
Meanwhile, NNPC Ltd reported improved operational performance. The company posted N5.08 trillion in revenue in October 2025, up from N4.27 trillion in September, according to its Monthly Report Summary for October. Profit after tax also rose sharply to N447 billion, compared with N216 billion in the previous month.
Earlier, NNPC Ltd announced a profit after tax of N5.4 trillion from total revenue of N45.1 trillion for the full year ended 2024, highlighting the contrast between corporate profitability and ongoing revenue remittance challenges to the Federation Account.
Nairametrics
