In a major fiscal recalibration, the Nigerian federal government has executed a sweeping write-off of legacy debts owed by the Nigerian National Petroleum Company Limited (NNPCL). According to a report from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) presented in November 2025, the Presidency directed the erasure of approximately 96% of the dollar-denominated debt and 88% of the naira-denominated obligations previously held on the books.
This move aims to resolve decades of accounting disputes between the national oil company and the Federation, effectively “resetting” the balance sheet as the NNPCL transitions further into its role as a commercial entity under the Petroleum Industry Act (PIA).
The Anatomy of the Write-Off
Before the reconciliation process, NNPCL’s outstanding liabilities to the Federation were staggering. The presidential directive essentially “nilled off” the vast majority of these balances:
While the audit covered royalty entitlements and oil-lifting liabilities through the end of 2024, the NUPRC noted that new debts are already accumulating in 2025, with statutory obligations for Jan–Oct 2025 already exceeding ₦1 trillion.
Persistent Revenue Shortfalls
Despite the massive debt cancellation, Nigeria’s upstream energy sector is struggling to meet its 2025 fiscal targets. The report revealed a widening gap between projected and actual earnings:
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November Target: The approved monthly revenue target was ₦1.204 trillion, but actual collections reached only ₦660.04 billion.
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Annual Deficit: As of late November, actual revenue collections stood at ₦7.60 trillion against a target of ₦13.25 trillion, leaving a massive ₦5.65 trillion shortfall.
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Royalty Crisis: Almost the entire shortfall is attributed to missing royalty income, highlighting systemic challenges in upstream collection.
Transparency and Global Criticism
The financial reset occurs amidst renewed friction between the NNPCL and Periscope Consulting, an audit firm hired by the Nigeria Governors’ Forum to investigate $42.37 billion in alleged under-remittances from 2011–2017.
Furthermore, international institutions like the World Bank have voiced concerns over the NNPCL’s inconsistent remittances, arguing that the lack of transparency undermines Nigeria’s macroeconomic stability. In response, NNPCL’s Group CEO, Bayo Ojulari, has pledged that the company’s books will undergo a transformation toward full compliance and accountability.
The Path Forward: Implementing the PIA
Industry experts argue that the write-off is a necessary, albeit controversial, step to clear the “structural flaws” of the pre-PIA era. To prevent a recurrence of these multi-trillion naira disputes, analysts recommend:
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Real-Time Monitoring: Digitizing the tracking of oil lifting and royalty payments.
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Independent Audits: Moving away from internal reconciliations toward third-party oversight.
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Strict Fiscal Discipline: Ensuring NNPCL operates purely as a commercial entity without the “blurred lines” of its former role as a government parastatal.
