President Bola Tinubu has approved the cancellation of a large share of debts owed by the Nigerian National Petroleum Company Limited to the Federation Account.

The decision removes about $1.42 billion and N5.57 trillion after a reconciliation of records.

The approval appears in a document prepared by the Nigerian Upstream Petroleum Regulatory Commission and presented at the November meeting of the Federation Account Allocation Committee.

How the debt was cleared

The report, obtained by The PUNCH, reviewed outstanding obligations tied to crude lifting, royalties and joint venture operations up to December 31, 2024.

Earlier submissions to FAAC put the debts at $1.48 billion and N6.33 trillion. After presidential approval, the government removed most of those balances from the Federation’s books.

The commission confirmed that the directive cleared about 96 percent of the dollar denominated debt and 88 percent of the naira obligations.

A stakeholder alignment committee reviewed and recommended the write off after examining NNPC’s legacy liabilities.

Fresh obligations remain

However, newer statutory obligations built up in 2025 remain unsettled.

The NUPRC reported that debts incurred between January and October 2025 stood at $56.8 million and N1.02 trillion.

During the review period, the commission recovered $55 million. That reduced the dollar balance to about $1.8 million, while the naira liability stayed unchanged.

According to the regulator, the recovered funds formed part of the revenue shared by the Federation for the month.

Revenue targets fall short

Meanwhile, the debt cancellation comes as the upstream regulator struggles to meet revenue targets.

FAAC data showed that against an approved monthly target of N1.204 trillion for 2025, actual collection in November reached N660.04 billion. That left a shortfall of N544.76 billion.

Royalty income, which makes up most upstream revenue, also missed projections. The commission collected N605.26 billion in November, far below the N1.144 trillion target.

By the end of November, total revenue collected by the NUPRC stood at N7.6 trillion, compared with an approved target of N13.25 trillion.

Long running audit dispute lingers

At the same time, disputes over alleged under remittance of oil revenue by NNPC continue.

The national oil company has rejected audit findings by Periscope Consulting, which claimed a $42.37 billion shortfall between 2011 and 2017. NNPC maintains that it fully accounted for all revenues during that period.

FAAC has since directed both sides to meet and reconcile their records. The reconciliation process remains ongoing.