President Bola Tinubu has approved the cancellation of about $1.42 billion and ₦5.57 trillion in outstanding debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account.
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, according to a statement published on the official X page of the Presidency on Monday.
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“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.
In recent years, Nigeria’s state-owned oil firm has faced sustained criticism over transparency and accountability in the discharge of its mandates, amid the country’s energy security challenges.
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For instance, the latest report by the Auditor-General of the Federation, published in September and recently submitted to the National Assembly, detailed systemic violations of financial regulations, weak internal controls and unexplained payments under controversial contracts by the NNPC.
The report indicted the oil firm for fund misappropriation, inflated contracts, irregular payments and failure to deduct statutory taxes.
In one instance, the audit report revealed that NNPC failed to deduct the statutory one per cent stamp duty on payments totalling ₦24.7 billion and $52.98 million made to contractors and service providers. This translated to unpaid taxes of ₦247 million and $529,863.
The anomalies, which occurred between 2020 and 2021, involved over $51 million in questionable settlements.
Debt write-off
The presidential approval comes amid ongoing reform efforts by the federal government to address legacy debt issues in the energy sector and improve transparency in the management of public revenues.
According to the document, the debt write-off followed recommendations by the Stakeholder Alignment Committee, which was set up to reconcile long-standing indebtedness between NNPC Ltd and the Federation.
The presidency noted that the cancelled debts cover legacy obligations incurred up to 31 December 2024. These include liabilities arising from production sharing contracts (PSCs), domestic supply obligations, repayment agreements, modified carry arrangements, as well as joint venture and PSC royalty receivables.
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The document also stated that corresponding accounting adjustments have already been effected in the Federation Account to reflect the approved cancellation.
The government clarified that new obligations incurred between January and October 2025 remain outstanding, adding that these debts are being actively tracked and recovered.
The statement further noted that the NUPRC document disclosed a separate and long-running dispute involving an alleged under-remittance of $42.37 billion between 2011 and 2017, which remains unresolved.
NNPC Ltd, according to the report, has 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 statement noted.
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