President Bola Tinubu’s approval of the cancellation of a substantial portion of the debts owed by the Nigerian National Petroleum Company Limited (NNPCL)to the Federation Account has raised a lot of unanswered questions.
The approval led to the wiping off of approximately $1.42 billion and N5.57 trillion after a reconciliation of records.
The decision has been questioned by public sector analysts and pressure groups.
Part of the questions raised is the President’s powers for such cancellation, since NNPCL money belongs to the three tiers of government, not just the Federal Government.
A document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November meeting of the Federation Account Allocation Committee confirmed the development.
In a section of the document titled, “Recovery from NNPC Ltd Outstanding Obligations,” the commission said the debts earlier reported at the October 2025 FAAC meeting stood at “$1,480,610,652.58 and N6,332,884,316,237.13 for PSC, DSDP, RA & MCA Liftings and JV & PSC Royalty Receivables respectively.”
It disclosed that the Presidency approved that most of those balances be removed from the federation’s books.
The document stated, “However, the commission recently received a Presidential Approval to nil off the outstanding obligations of NNPC Ltd as at 31st December 2024, as submitted by the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation.”
Reacting to the development, the Lead Director of the Centre for Social Justice, Eze Onyekpere, questioned Tinubu’s constitutional powers for such an action, as the money belongs to the federation, not just the Federal Government.
He said: “The president has no such statutory or constitutional right or duty to write off any debt of a government corporation. If he purported to do so, it is an unconstitutional exercise of power. In fact, the president is obliged to recover all sums due to the treasury through GOEs.
“This money belongs to the three tiers of government that share from the federation account. Unless the three tiers agree, the presidential waiver is an exercise in futility,” he added.
Expressing similar concerns, a public policy analyst and a development economist, Celestine Okeke, noted that the governors might not raise questions regarding the debt write-off since most of them are moving to the president’s party.
“With this development, do you think any governor would have the audacity to take him to court now that everyone of them is even carpet-crossing to the APC?,” he reasoned.
The Executive Director of African Centre for Leadership, Strategy and Development, Monday Osasah, told The ICIR that “The president may have acted based on the information available to him, which most of us are not privy to.”
He, however, called for transparency in the process, stressing the importance of Nigerians being carried along in such critical decisions, since it’s money owed by the federation.
An analysis of the cancelled debts shows that the presidential directive wiped out about 96 per cent of the dollar-denominated debt and about 88 per cent of the naira-denominated obligations previously reported as outstanding.
The document indicates that the approval followed the recommendations of the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation, which reviewed the company’s royalty and lifted related liabilities up to December 31, 2024.
Despite the cancellation of the legacy balances, fresh debts built up in 2025 remain.
In a separate section titled “NNPC Ltd Outstanding Obligations,” the regulator disclosed that statutory obligations arising between January and October 2025 still stood at “$56,808,752.32 and N1,021,550,672,578.87 for PSC & MCA Liftings and JV Royalty Receivables respectively.”
The commission added that part of the dollar component was recovered in the month under review, stating: “However, the commission received $55,003,997.00 in the month under review from the outstanding, leaving a balance of $1,804,755.32 and N1,021,550,672,578.87. The amount of $55,003,997.00 received is part of the total collection reported above for sharing by the Federation this month.”
The NUPRC confirmed that it had already implemented the directive in the Federation Account, noting that “the Commission has passed the appropriate accounting entries as approved.”
The approval effectively resolves long-running disputes over NNPC’s legacy indebtedness to the Federation, while current liabilities from ongoing operations continue to be tracked for future recovery.
The debt cancellation comes at a time when the commission is struggling to meet its revenue projections for the year.
The Senate had on December 15, demanded answers and expressed doubts over 2026 budget projections after the Federal Government admitted that it realised just N10 trillion out of the N40 trillion revenue targeted for the 2025 fiscal year.
This development led to the Senate asking questions about persistent borrowing, overlapping budgets and weak capital project execution.
Data from the NUPRC document showed that against a 2025 approved monthly revenue target of N1.204 trillion, the commission recorded N660.04 billion as actual collection for November 2025, leaving a shortfall of N544.76 billion for the month.
Royalty payments on oil and gas, which account for the bulk of upstream revenues, fell sharply below target. The approved monthly royalty projection was N1.144 trillion, compared to N605.26 billion actually collected in November, indicating a deficit of N538.92 billion.
Cumulatively, as of November 30, 2025, the NUPRC’s total approved revenue stood at N13.25 trillion, while actual cumulative collections were N7.60 trillion, representing a revenue gap of N5.65 trillion. For royalties alone, cumulative approved collections stood at N12.59 trillion against N6.96 trillion actually received, leaving a shortfall of N5.63 trillion.
The document further showed a drop in revenue collections compared to the previous month. While N873.10 billion was collected in October 2025, the figure declined to N660.04 billion in November.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.