In a significant financial maneuver, the Nigerian National Petroleum Company Limited (NNPCL) has officially written off a staggering N4.01 trillion in subsidy arrears and other outstanding debts owed by the Federal Government. This major debt cancellation follows a detailed reconciliation process between the state-owned oil company and the government.
FAAC Records Reveal Massive Debt Reduction
The details of this substantial write-off were documented in official papers presented by NNPCL to the Federation Account Allocation Committee (FAAC) during its meetings in October and November 2025. An analysis of the committee's records shows a dramatic shift in the company's financial obligations to the Federation Account.
According to the documents, NNPCL's outstanding payables to the Federation stood at a colossal N4.72 trillion as of the October 2025 FAAC gathering. By the time the committee convened in November, this figure had plummeted to N706.32 billion. This sharp decline of approximately N4.01 trillion marks the scale of the debt that was cleared from the books.
Presidential Approval and the Reconciliation Process
The cancellation was executed after receiving presidential approval to wipe out a large portion of legacy financial obligations. This decision came on the heels of a reconciliation exercise aimed at resolving long-standing accounting discrepancies between NNPCL and the federal authorities.
The FAAC submission clarified that several balances previously listed as overdue—including those related to Production Sharing Contracts (PSC), Direct Sale Direct Purchase (DSDP) arrangements, Royalty, and Joint Venture liftings—were approved for removal from the Federation's accounts. The documents also addressed differences between figures earlier quoted by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and NNPCL's own presentations.
A notable part of the resolution involved legacy royalty, tax, and PSC profit obligations up to May 2023, which had already been accounted for under a framework established by the Presidential Approved Stakeholder Alignment Committee. Furthermore, a separate N2.03 trillion in royalty and tax obligations covering June to December 2023 was excluded from NNPCL's liabilities and reassigned to the Office of the Accountant-General of the Federation (OAGF).
Closing the Subsidy Chapter and Emerging Concerns
This massive debt write-off effectively draws a line under Nigeria's former fuel subsidy regime. Under that system, NNPCL, acting as the sole importer of petrol, accumulated trillions of naira in under-recoveries before the subsidy was finally removed in mid-2023.
While the cancellation resolves historical disputes, financial experts and observers have raised questions about its impact on federal revenues and the overall transparency of inter-agency accounting practices. The move highlights the complex financial legacy of the subsidy era.
Despite clearing these old debts, new financial obligations have emerged. FAAC records indicate that fresh statutory liabilities accumulated from January to October 2025 remain outstanding. These new debts are estimated at $56.8 million and N1.02 trillion, although a portion of the dollar-denominated amount has reportedly been recovered. The NUPRC has confirmed that the approved accounting adjustments have now been fully implemented in the Federation Account.
This development echoes a previous financial reset for NNPCL, where the federal government cancelled $1.42 billion and N5.57 trillion in legacy debts. While the reconciliation ends disputes over historical claims, a noted shortfall in upstream revenue collections points to ongoing fiscal challenges within Nigeria's vital oil and gas sector, even after such a significant debt clearance.
