BUSINESS
President Tinubu Approves Historic Debt Write-Off for NNPC, Cancels $1.42bn and ₦5.57tn in Legacy Obligations
President Bola Ahmed Tinubu has approved the cancellation of a significant portion of outstanding debts owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, wiping out approximately $1.42 billion alongside ₦5.57 trillion in legacy obligations.
The approval was contained in a document issued by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and formally presented at the November 2025 meeting of the Federation Account Allocation Committee (FAAC).
According to the document, the debt write-off followed recommendations by the Stakeholder Alignment Committee, which was constituted to reconcile long-standing indebtedness between NNPC Ltd and the Federation. The committee’s work focused on resolving historical financial obligations that had accumulated over several years within the oil and gas sector.
The cancellation applies strictly to legacy debts incurred up to December 31, 2024. These include liabilities arising from Production Sharing Contracts (PSC), domestic crude oil supply obligations, repayment agreements, modified carry arrangements, as well as joint venture and PSC royalty receivables.
In line with the approval, corresponding accounting adjustments have already been effected in the Federation Account, effectively clearing the books of the affected obligations and reflecting the new financial position of NNPC Ltd in relation to the Federation.
However, the document clarified that new debts accumulated between January and October 2025 are not covered by the write-off. These obligations remain outstanding and are currently being monitored, reconciled, and recovered through ongoing financial tracking mechanisms.
Meanwhile, a separate and long-standing dispute between the Federation and NNPC Ltd remains unresolved. The dispute concerns an alleged $42.37 billion under-remittance covering the period between 2011 and 2017. NNPC Ltd has consistently rejected the claim, maintaining that all revenues due to the Federation during the period in question were fully accounted for.
The debt cancellation is expected to ease fiscal pressures around FAAC distributions while reopening broader conversations on transparency, reconciliation, and accountability within Nigeria’s oil revenue manageme
nt framework.