DESPITE reporting record profits and rising revenues, Nigerian National Petroleum Company Limited (NNPC) may be carrying significant hidden financial risks, according to a February 2026 report by SBM Intelligence.
In its report titled ‘NNPC’s Rising Profits Obscure Deepening Debt Burdens,’ SBM argues that while NNPC’s headline numbers appear strong, they mask substantial off-balance-sheet obligations that could materially alter the company’s financial outlook.
NNPC posted a profit after tax of N4.6 trillion in 2024, up from N3.3 trillion in 2023, with revenue climbing 32 percent to N31.5 trillion. The company projects further growth in 2025, targeting N5.1 trillion in net profit on revenue of N35.2 trillion. Profit margins have remained stable at around 14 percent, earning favourable comparisons with other African state oil firms.
However, SBM cautions that these figures reflect only part of the story.
N6.3 trillion off the books
The most significant concern raised in the report is the existence of more than N6.3 trillion in off-balance-sheet liabilities as of 2023. According to SBM, N5.4 trillion of this total is owed to refineries, while N890 billion relates to cash commitments embedded in forward sale agreements. In addition, N18.14 billion was set aside for litigation provisions, further increasing contingent risks.
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While such arrangements are not uncommon in the global oil industry, SBM notes that the scale and concentration of these liabilities within a single state-owned entity operating in a volatile economic environment heighten the risks.
The report warns that if these obligations were fully consolidated into NNPC’s formal financial statements, key leverage and profitability metrics would look markedly weaker.
Subsidy receivables add uncertainty
SBM also highlights a N5.1 trillion subsidy reimbursement owed to NNPC by the federal government. Although recorded as a receivable that could strengthen the company’s asset base if paid, the firm cautions that it should not be viewed as a straightforward financial positive.
The receivable reflects years in which NNPC effectively acted as a financing arm for Nigeria’s fuel subsidy regime, absorbing costs that were not promptly reimbursed. Though the petrol subsidy was officially removed in 2023, legacy claims remain unresolved.
SBM describes this arrangement as emblematic of the opaque financial entanglement between NNPC and the federal government, warning that reliance on state reimbursements introduces cash flow uncertainty not captured by headline profit figures.
Strong balance sheet – with caveats
On paper, NNPC’s balance sheet shows improvement. Total assets are projected to rise to N255 trillion in 2025 from N240 trillion in 2024, while liabilities are expected to increase more modestly to N212 trillion from N205 trillion. Equity is forecast to expand from N35 trillion to N43 trillion.
Long-term debt is also projected to decline from N18.5 trillion in 2024 to N17.2 trillion in 2025, with the debt-to-equity ratio improving from 0.53 to 0.40, metrics that would typically reassure creditors.
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Yet SBM stresses that these improvements do not incorporate the flagged off-balance-sheet exposures. Factoring them in would significantly alter the leverage profile.
Rising costs compound pressures
Beyond structural liabilities, operating costs are trending upward. Personnel expenses are forecast to increase 14 percent to N545 billion in 2025. Statutory donations, including host community development trusts, security support and education scholarships, rose from N188 billion in 2024 to N208 billion in 2025. Discretionary donations also spiked sharply in 2023, though from a low base.
SBM argues that the combination of rising operating expenses, unresolved subsidy claims and substantial hidden obligations raises questions about the durability of NNPC’s recent profit momentum.
Durability of profits in question
NNPC’s strong earnings have been touted by government officials as evidence of reform gains following subsidy removal. However, SBM’s analysis suggests that the sustainability of those profits may depend on how and when deferred obligations crystallise.
The report concludes that stakeholders should look beyond headline profitability and assess the underlying debt structure, warning that NNPC’s improving surface metrics may obscure deeper financial vulnerabilities.
