President Bola Ahmed Tinubu has approved the cancellation of a substantial portion of the Nigerian National Petroleum Company Limited’s (NNPC Ltd) outstanding debts owed to the Federation Account, effectively wiping out about $1.42 billion in legacy obligations.
The approval is contained in a document issued by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November 2025 meeting of the Federation Account Allocation Committee (FAAC).
According to the document, the decision followed the recommendations of the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation, which was set up to address long-standing disputes and reconcile outstanding financial obligations in the oil and gas sector.
The approved write-off covers legacy debts accumulated up to December 31, 2024, spanning several categories. These include obligations arising from Production Sharing Contracts (PSC), Domestic Crude Supply commitments, repayment agreements, modified carry arrangements, as well as joint venture and PSC royalty receivables.
NUPRC disclosed that extensive reconciliation work had been carried out with relevant stakeholders, leading to the alignment of figures and corresponding accounting adjustments, which have already been reflected in the Federation Account.
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While the approval effectively clears most historical liabilities, the document noted that newer obligations incurred in 2025, covering the period from January to October, remain outstanding. These debts are said to be under active monitoring, with recovery processes ongoing.
The development is expected to ease pressure on the Federation Account and improve fiscal clarity between NNPC Ltd and the three tiers of government, particularly at a time of heightened scrutiny of oil revenue remittances.
However, the document also highlighted that a separate and long-running dispute over alleged under-remittance of $42.37 billion between 2011 and 2017 remains unresolved. NUPRC noted that NNPC Ltd has consistently rejected the claims, maintaining that all revenues generated during the period were fully accounted for.
The unresolved dispute continues to be a major point of contention in Nigeria’s oil revenue management and is expected to remain under regulatory and stakeholder review.