The Federal Government has approved the cancellation of about ₦7.58 trillion debt owed by the Nigerian National Petroleum Company Limited (NNPC Ltd) to the Federation Account, following an extensive reconciliation of records between both parties.

The approval, granted under the administration of President Bola Ahmed Tinubu, effectively wipes off approximately $1.42 billion (about ₦2.059 trillion) and an additional ₦5.57 trillion from NNPC Ltd’s outstanding financial obligations to the federal purse.

Findings indicate that the decision was contained in a document prepared by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and presented at the November 2025 meeting of the Federation Account Allocation Committee (FAAC).

The document was based on the recommendations of the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation.

According to the document, the debt write-off covers legacy obligations accumulated up to Dec. 31, 2024.

These include Production Sharing Contracts (PSC) liabilities, domestic crude oil supply obligations, repayment agreements, modified carry arrangements, as well as joint venture and PSC royalty receivables.

The reconciliation exercise was jointly undertaken by relevant stakeholders, with NUPRC coordinating the technical and accounting verification of the figures.

It was confirmed that the corresponding accounting adjustments had already been effected in the Federation Account to reflect the approved cancellation.

However, the document clarified that while most of the historical debts had been cleared, newer obligations incurred by NNPC Ltd between January and October 2025 remain outstanding.

The outstanding 2025 liabilities, it said, are currently being tracked and are subject to recovery through existing reconciliation and remittance mechanisms.

Meanwhile, a separate and long-standing dispute involving alleged under-remittance of $42.37 billion by NNPC Ltd between 2011 and 2017 remains unresolved.

NNPC Ltd has consistently rejected the allegation, maintaining that all revenues due to the Federation Account within the period were properly accounted for and remitted.

Analysts say the debt cancellation is expected to ease pressure on NNPC Ltd’s balance sheet and improve its operational flexibility, while also bringing clarity to the financial records of the Federation Account.

The Federal Government has not ruled out further reconciliation exercises as part of ongoing efforts to strengthen fiscal transparency and accountability in the oil and gas sector.