President Bola Tinubu has approved the removal of a substantial portion of historical debts owed by NNPC Ltd to the Federation Account, effectively closing the books on legacy obligations accumulated before the end of 2024.
The decision followed a reconciliation exercise conducted by the Nigerian Upstream Petroleum Regulatory Commission in collaboration with relevant stakeholders.
The outcome of the review was presented at a meeting of the Federation Account Allocation Committee, where the regulator confirmed that presidential approval had been granted to remove most of the outstanding balances from the Federation’s records.
According to the reconciliation, the liabilities related mainly to royalty receivables and crude oil lifting arrangements under joint venture and production sharing contract frameworks.
Following the directive, the bulk of the dollar- and naira-denominated obligations previously classified as outstanding were written off through approved accounting adjustments.
The regulator said the directive applies strictly to obligations recorded up to December 31, 2024, and reflects the conclusions reached by the Stakeholder Alignment Committee set up to resolve long-standing differences between NNPC Ltd and the Federation.
The commission confirmed that all required accounting entries have already been effected in line with the approval.
However, liabilities arising from NNPC Ltd’s operations in 2025 remain unaffected by the decision. Outstanding statutory obligations linked to crude oil liftings and royalty payments accumulated between January and October 2025 are still being tracked, with partial recoveries already recorded during the period under review.
The debt reset comes amid pressure on upstream revenue performance. Data reviewed by the regulator shows that actual collections in recent months have fallen below approved targets, with oil and gas royalties accounting for the largest share of the shortfall.
Total collections also declined month-on-month, underscoring the strain on Federation revenues despite the resolution of legacy balances.
The write-off is expected to end years of accounting disputes surrounding NNPC’s historical obligations to the Federation Account.
However, scrutiny remains on current remittances and transparency, particularly as disagreements persist between NNPC Ltd and external consultants over alleged under-remittance claims from earlier years.
Analysts say the move draws a clear line under pre-reform liabilities, shifting attention firmly to compliance under the post–Petroleum Industry Act framework.
With NNPC now operating as a commercial entity, regulators and revenue authorities are expected to intensify monitoring of ongoing obligations to ensure that legacy issues do not re-emerge under the new regime.