The Federal Government has approved the cancellation of a large part of the debts owed by the Nigerian National Petroleum Company Limited (NNPC) to the Federation Account, wiping off about $1.42bn and ₦5.57tn.

The approval followed a reconciliation of financial records between NNPC and the Federation, coordinated by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The decision was disclosed in a revenue report presented at the November meeting of the Federation Account Allocation Committee (FAAC).

According to the report, NNPC’s outstanding obligations previously stood at about $1.48bn and ₦6.33tn, covering royalties, joint venture payments and crude oil lifting-related liabilities. However, a presidential directive approved that most of these balances, classified as legacy debts up to December 31, 2024, be removed from the Federation’s books.

The NUPRC said the cancellation eliminated about 96 per cent of the dollar-denominated debt and nearly 88 per cent of the naira obligations. The commission added that it had already adjusted the Federation Account records in line with the approval.

Despite the debt relief, the regulator noted that fresh obligations incurred by NNPC in 2025 remain. As of October 2025, outstanding liabilities stood at about $56.8m and ₦1.02tn. Part of the dollar debt has been recovered, leaving a balance of about $1.8m.

The report also revealed that the NUPRC is struggling to meet its revenue targets, with collections for November 2025 falling significantly below projections, largely due to lower-than-expected royalty payments from oil and gas operations.

Meanwhile, disputes over alleged under-remittance of oil revenues by NNPC in previous years remain unresolved, with FAAC directing further reconciliation between the national oil company and auditors engaged by state governors.