The recent approval by President Bola Ahmed Tinubu for the cancellation of billions of naira in debts owed by NNPC Limited to the Federation has ignited fresh debate over transparency, due process, and fiscal governance in Nigeria’s oil and gas sector.
The development comes shortly after NNPC Limited announced a strong financial performance for the year ended 2024, declaring a profit after tax of ₦5.4 trillion on revenue of ₦45.1 trillion. The company described the outcome, disclosed during its analyst call, as evidence of robust operational delivery.
However, public attention quickly shifted following reports that the President approved the write off of ₦1.42 trillion and ₦5.57 trillion, about $3.85 billion, in debts reportedly owed by the national oil company to the Federation’s Consolidated Revenue Fund. The funds in question are revenues meant to be shared among the federal, state, and local governments, a reality that has raised constitutional and governance concerns.
Speaking on the issue, Tilewa Adebajo, Chief Executive Officer of CFG Advisory, described the situation as deeply troubling, warning that it exposes weaknesses in process and institutional accountability.
“This is fundamentally a governance and process issue,” Adebajo said. “While the President can initiate and endorse policy, a debt write off of this magnitude cannot be seen as unilateral. By law, such a decision must go through the Minister of Finance, the Federation Accounts Allocation Committee, and the National Assembly.”
According to Adebajo, the most sensitive aspect of the matter is its implication for the Federation Account, which constitutionally belongs to all tiers of government.
“Any reconciliation involving NNPC and the Federal Government automatically affects states and local governments,” he explained. “The Federal Government cannot reconcile or write off these obligations on its own without carrying the other stakeholders along.”
He warned that the decision, if not properly handled, could reopen long standing legal disputes involving states and local governments over revenue entitlements.
Despite NNPC’s transition into a limited liability company under the Petroleum Industry Act, Adebajo said the episode raises serious questions about the effectiveness of the company’s corporate governance framework.
“You have to ask whether the NNPC board actually met to consider this issue,” he said. “Were resolutions passed? Were minutes taken? And were these decisions properly routed through the shareholder structure before presidential endorsement? The way this was communicated makes it appear as though the decision was taken abruptly.”
He added that poor communication has worsened public skepticism, reinforcing what he described as a growing trust deficit.
“When government actions are not properly explained, people assume the worst,” Adebajo noted. “Transparency is critical, especially in matters involving public funds.”
Beyond governance, Adebajo cautioned against relying solely on NNPC’s headline profit figures, noting that deeper financial indicators point to structural weaknesses.
“If you look beyond the headlines, NNPC’s current liabilities exceed its current assets,” he said. “That raises serious liquidity concerns, even before you begin to examine unresolved receivables and outstanding debts.”
He also pointed to the admission that more than $42 billion remains unreconciled.
“That figure is almost equivalent to Nigeria’s current external reserves,” he said. “In that context, this debt write off is relatively small. The larger issue is the massive amount still awaiting reconciliation.”
Adebajo argued that the situation calls for a comprehensive forensic audit of NNPC’s finances, similar to steps taken in the past to resolve financial backlogs in other public institutions.
“When the Central Bank faced reconciliation challenges, forensic auditors were engaged. Legitimate claims were paid, and questionable ones discarded,” he said. “NNPC needs the same level of scrutiny if the goal is truly to clean up its balance sheet.”
He added that the controversy also reflects broader fiscal pressures facing the country, including widening budget deficits, rising debt levels, and the erosion of buffers such as the Excess Crude Account.
“Nigeria’s challenge is not just about reforms,” Adebajo said. “It is about the absence of a clear disinflation and growth strategy that increases productivity and creates jobs. Without that, reforms alone will not deliver real economic relief to citizens.”
He concluded that the handling of the NNPC debt issue will serve as a critical test of institutional credibility under the current administration.
“If the right processes were followed, government needs to clearly explain them,” Adebajo said. “That clarity is essential to rebuild trust and assure Nigerians that public resources are being managed responsibly.”
