President Bola Ahmed Tinubu has given his official approval for the cancellation of a significant portion of the outstanding debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account. This major financial decision effectively wipes clean a substantial legacy burden from the national oil company's books.
The Details of the Debt Cancellation
The approval was detailed in an official document from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). This document was presented during the November 2025 meeting of the Federation Account Allocation Committee (FAAC). The write-off follows the specific recommendations made by the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation.
The total value of the cancelled obligations amounts to approximately $1.42 billion. According to the NUPRC document, this write-off covers all legacy financial obligations up to December 31, 2024. The cleared debts include several complex areas of the oil and gas sector's financial framework.
These areas are:
- Production Sharing Contracts (PSC) obligations
- Domestic Supply obligations
- Various repayment agreements
- Modified carry arrangements
- Joint venture and PSC royalty receivables
Accounting Adjustments and Ongoing Recoveries
The NUPRC confirmed that the necessary accounting adjustments related to this massive debt relief have already been processed within the Federation Account. This formalizes the removal of the $1.42 billion liability.
However, the commission was quick to note a crucial distinction. While the old debts are cleared, newer financial obligations from 2025 are not included in this waiver. Specifically, obligations incurred between January and October 2025 remain outstanding. The NUPRC stated that these 2025 debts are being actively tracked and efforts are underway to ensure their recovery.
Unresolved $42.37 Billion Dispute Remains
Separate from this recent write-off, a much larger and long-running financial dispute remains on the table. This involves allegations that NNPC Ltd failed to remit a staggering $42.37 billion to the Federation Account between 2011 and 2017.
This particular case is still unresolved. NNPC Ltd has consistently rejected these claims, maintaining its position that all revenues due within that period were properly accounted for and remitted. The resolution of this separate, multi-billion dollar allegation continues to be a point of contention.
President Tinubu's approval to clear the $1.42 billion in identified legacy debts represents a significant move to settle historical liabilities and potentially streamline NNPC Ltd's financial structure as it continues its operations as a fully commercial entity.
