The Nigerian government has confirmed its plan to settle a fuel subsidy debt of N7.74 trillion owed to the Nigerian National Petroleum Company Limited (NNPCL) within the next 210 days.
The debt, which was accumulated as an exchange rate differential for the importation of Premium Motor Spirit (PMS), spans from June 2023 to September 2024 following the full deregulation of the downstream oil sector.
The figure was disclosed in a document presented by NNPCL to the Federation Account Allocation Committee (FAAC) during its February meeting in Abuja.
According to the document, the subsidy debt initially stood at N10.499 trillion but N2.756 trillion was recovered between November 2023 and September 2024, therefore reducing the outstanding debt to N7.74 trillion.
The report revealed a month-by-month breakdown of how the debt escalated: 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; September 2024: N7.74 trillion.
The subsidy amount represents 14.07% of Nigeria’s N54.99 trillion national budget for 2025.
The debt primarily arose from the government covering the difference between the official exchange rate and the actual cost incurred by NNPCL for petrol imports.
The revelation comes amid ongoing scrutiny of Nigeria’s subsidy policy following President Bola Tinubu’s announcement in May 2023 that the fuel subsidy had been removed.
Despite this declaration, reports from the International Monetary Fund (IMF) and World Bank suggest that the subsidy was quietly reintroduced through price stabilization measures.
The subsidy debt was largely driven by exchange rate differentials (the gap between the official exchange rate and the actual cost at which NNPCL imported fuel).
In August 2024, NNPCL requested a refund of N4.71 trillion under the category of “Exchange rate differential on PMS and other joint venture taxes.”
Energy expert Wumi Iledare criticised the reimbursement arrangement and questioned the rationale behind the government’s decision.
“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.
His concerns were echoed by members of the FAAC committee, who pointed to the discrepancies in NNPCL’s revenue reporting.
Ogun State Accountant-General, Tunde Aregbesola, cited a drop in revenue remitted by NNPCL compared to previous months and pointed to an outstanding balance of N10.8 trillion in receivables.
FAAC Chairperson Oluwatoyin Madein assured stakeholders that an alignment committee is currently reviewing the figures to ensure proper reconciliation and transparency.
