The Nigerian government has confirmed that it owes the Nigerian National Petroleum Company Limited (NNPCL) a massive N7.7 trillion in fuel subsidy debts, covering the period from June 2023 to September 2024. This revelation comes after months the Presidency repeatedly rejected claims of owing or paying for subsidy costs.
President Bola Ahmed Tinubu had on May 29, 2023, announced the controversial subsidy removal, a decision that has now laid bare the country’s mounting financial obligations.
The debt, which accumulated as an exchange rate differential for the importation of Premium Motor Spirit (PMS), spans from June 2023 to September 2024, when the country fully implemented the deregulation of the downstream oil sector.
The figure was disclosed in a document presented by the NNPCL to the Federation Account Allocation Committee (FAAC) during its February meeting in Abuja, PUNCH reports.
The government has outlined a plan to clear the outstanding subsidy within 210 days, according to the document obtained by our correspondent.
The report revealed that the subsidy debt initially stood at N10.499 trillion, but N2.756 trillion was recovered between November 2023 and September 2024, bringing the balance to N7.74 trillion.
A month-by-month breakdown showed how the debt steadily increased: June 2023 – N1.402 trillion; July 2023 – N1.48 trillion; October 2023 – N1.81 trillion; March 2024 – N4.68 trillion; June 2024 – N6.97 trillion, and September 2024 – N7.74 trillion.
The subsidy amount represents 14.07% of Nigeria’s N54.99 trillion 2025 national budget.
In August 2024, it was reported that the NNPCL requested a refund of N4.71 trillion from the government for petrol imports.
At the time, this was listed under “Exchange rate differential on PMS and other joint venture taxes.”
Exchange rate differentials occur when there is a change in the value of a currency over time, affecting the cost of transactions.
In this case, the government covered the difference between the official exchange rate and the actual cost incurred by NNPCL in importing petrol.
Despite President Bola Tinubu’s declaration in May 2023 that the fuel subsidy had been removed, reports from the International Monetary Fund (IMF) and World Bank suggest that the subsidy was quietly reintroduced through price stabilization measures.
Energy expert Wumi Iledare questioned the rationale behind the government reimbursing NNPCL, given that the company sells crude oil in foreign currency on the government’s behalf.
“If NNPCL sells oil on behalf of the government and gives it the dollar revenue, why should the government pay back any money? NNPCL should be remitting funds like other oil companies,” Iledare argued.
Furthermore, members of the FAAC committee have raised concerns about inconsistencies in NNPCL’s revenue reporting.
Ogun State Accountant-General, Tunde Aregbesola, noted a significant drop in revenue remitted by NNPCL compared to previous months, citing an outstanding balance of N10.8 trillion in receivables.
FAAC Chairperson Oluwatoyin Madein assured that an alignment committee is currently reviewing the figures to ensure proper reconciliation.
The government has committed to settling the N7.74 trillion debt within 210 days, but concerns remain over Nigeria’s ability to sustain its current economic policies without further subsidy-related liabilities.
With rising inflation and fluctuating foreign exchange rates, economic experts warn that the government must implement more sustainable measures to prevent a recurrence of subsidy debt accumulation in the future.
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