THE federal government has written off most of the legacy debts owed to the Federation Account by the Nigerian National Petroleum Company (NNPC) Limited, clearing about $1.42 billion and N5.57 trillion after a reconciliation exercise approved by President Bola Tinubu.

Details of the move are contained in a regulatory report by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which was presented at the November meeting of the Federation Account Allocation Committee (FAAC). The write-off covers longstanding obligations linked to crude oil liftings, production-sharing contracts and joint-venture royalties accumulated up to the end of 2024.

According to the commission, the debt cancellation followed recommendations of a stakeholder alignment committee set up to reconcile financial claims between NNPC Ltd and the federation.

“The commission recently received a presidential approval to cancel 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,” the NUPRC said.

Before the adjustment, NUPRC had reported that NNPC’s outstanding obligations to FAAC totalled about $1.48 billion and N6.33 trillion. Following the reconciliation, $1.42 billion and N5.57 trillion of those balances were struck off the books.

READ ALSO: Nigerians question NNPC’s $2.8bn deal with Dangote Refinery

The write-off represents roughly 96 percent of the dollar-denominated debt and about 88 percent of the naira liabilities previously classified as outstanding.

The move is aimed at settling long-running disputes over historical claims and giving both parties a clean slate, Economy Post found.

However, the cancellation does not cover fresh liabilities incurred in 2025. The regulator disclosed that statutory obligations arising between January and October this year remain outstanding, including balances of about $56.8 million and N1.02 trillion relating to lifting charges and joint-venture royalties.

Part of the dollar component was recovered during the period. NUPRC said it received $55 million in November, leaving an outstanding balance of $1.8 million and N1.02 trillion. The recovered amount formed part of November’s distributable revenue to the federation.

The development comes at a time upstream revenue performance continues to trail projections. Data in the same report show that the commission missed its approved revenue target for November by more than N540 billion, largely due to weaker-than-expected royalty receipts from oil and gas production. Actual collections also fell compared with October levels.

Legacy debts

For many years, the NNPC intermittently failed to remit funds to the federation account. The national oil company often claimed that its revenues were hard by oil theft, low oil prices or other reasons.

In 2016, the Revenue Mobilisation Allocation and Fiscal Commission said the NNPC owed the federation account a total of N4.9 trillion in unremitted funds between January 2011 and December 2015. “Available records at the commission’s disposal indicate that between January 2011 and December 2015, the total indebtedness of the NNPC to the Federation Account was N4.9 trillion, a figure that included the NNPC’s claims for subsidy on petroleum products, crude and product losses, strategic reserves and pipeline maintenance cost,” the statement had read.

READ ALSO: Exclusive: NNPC spends N17trn on refineries’ turnaround maintenance in 20 years

Earlier in 2014, a report by the Post Mortem Sub-committee of the FAAC had alleged the NNPC had outstanding domestic crude sales proceeds due to the federation accounts valued at N3.87 trillion incurred between January 2011 and August 2014. It is not clear whether the 2016 figures also included the 2014 numbers.

In 2019, a report showed that the NNPC owed an outstanding debt of $1.7 billion to the federation account. Oil and gas experts often attributed low or no remittances to poor fiscal management by the national oil company. For years, the four refineries managed by the NNPC incurred mnumental losses.

Between 2017 and 2020, Port Harcourt refinery incurred N241.609 billion in comprehensive losses, while its revenue merely stood at N6.27 billion. Despite not making revenues in 2020, the NNPC-owned refinery employed 487 new staff and paid N23 billion in salary without producing oil.

In 2019, the refinery recorded zero revenues but reported N25.19 billion in expenses. It also paid N22.195 billion in salaries, allowances, pensions and allowances.

Similarly, Kaduna refinery’s revenues stood at N2.278 billion between 2017 and 2019 but losses were estimated at N241.527 billion. In 2018, the refinery made no profits but spent N317.50 billion on transport and travels. From 2017 to 2019, Kaduna refinery spent N443.421 billion on transport and travels.

The story is the same for Warri refinery, which incurred comprehensive losses totalling N188.436 billion between 2019 and 2019. Despte these poor financial results, Warri refinery directors raised their earnings from N270.090 million in 2018 to N332.137 million in 2019, having pocketed N353.019 million as remuneration in 2017.

Economy Post had earlier reported that the NNPC spent N16.7 trillion (approximately N17 trillion) on the turnaround maintenance of the nation’s three refineries between 2002 and 2022.

Economy Post also reported that the 4 refineries owed the NNPC a total sum of N4.498 trillion by the end of 2023 without producing oil, according to the 2023 full-year financial statement released by the national oil company.

According to the NNPC financials, Port Harcourt Refining Company Limited was indebted to the NNPC to the tune of N1.97 trillion by the end of 2023, while Kaduna Refining and Petrochemical Company Limited owed its parent company N1.356 trillion. Similarly, Warri Refining and Petrochemical Company Limited owed the NNPC the sum of N1.171 trillion by the end of last year.