The federal government has written off the bulk of legacy debts owed by the Nigerian National Petroleum Company Ltd. (NNPCL) to the federation account, wiping out about $1.42 billion and N5.57 trillion following a reconciliation exercise approved by President Bola Tinubu.
The decision, contained in a regulatory document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November meeting of the Federation Account Allocation Committee (FAAC), effectively clears longstanding balances linked to crude oil liftings, production-sharing contracts and joint venture royalties accumulated up to the end of 2024.
The regulator said the approval followed a review by a stakeholder committee set up to reconcile claims between the state oil company and the federal government.
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“However, the commission recently received a Presidential Approval to nil off the outstanding obligations of NNPC Ltd as at 31st December 2024 as submitted by the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation.”
Before the adjustment, outstanding obligations reported to FAAC stood at roughly $1.48 billion and N6.33 trillion. The bulk of those balances were removed from the Federation’s books after the reconciliation. “Consequently, out of $1,480,610,652.58 and N6,332,884,316,237.13, the affected outstanding obligations that have been nil off are $1,421,727,723.00 N5,573,895,769,388.45. The commission has passed the appropriate accounting entries as approved.”
The write-off amounts to about 96% of the dollar-denominated debt and roughly 88% of the naira obligations previously classified as outstanding, according to an analysis of the figures.
Officials familiar with the process say the move is intended to resolve years of disputes over historical claims and allow both sides to start afresh with cleaner balance sheets.
The cancellation, however, does not extend to liabilities incurred in 2025. The regulator disclosed that statutory obligations arising between January and October this year remain on the books, with balances of about $56.8 million and N1.02 trillion tied to lifting-related charges and joint venture royalties.
Part of the dollar component was recovered during the period under review. “However, the commission received $55,003,997.00 in the month under review from the outstanding, leaving a balance of $1,804,755.32 and N1,021,550,672,578.87. The amount of $55,003,997.00 received is part of the total collection reported above for sharing by the Federation this month.”
The debt relief comes as upstream revenue collections continue to lag official targets.
Data in the same document show that the commission missed its approved monthly revenue goal for November by more than N540 billion, driven largely by weaker-than-expected royalty receipts from oil and gas production. Actual collections also declined from October levels.
