By JKNewsMedia
THE NIGERIAN government’s fuel subsidy debt to the Nigerian National Petroleum Company Limited (NNPCL) has climbed to N7.74tn, driven by exchange rate differentials affecting fuel import costs.
This financial burden accumulated between June 2023 and September 2024, despite the government’s public stance on subsidy removal.
A document presented by NNPCL at the Federation Account Allocation Committee (FAAC) meeting in February 2025, obtained by our correspondent, detailed the outstanding liability.
The government has outlined a plan to settle the debt within 210 days.
Fuel import subsidies arose from the gap between actual importation costs and the controlled retail price in Nigeria.
Despite the formal deregulation of the downstream sector, the government covered these cost differences, creating a massive financial obligation to NNPCL.
An analysis of the FAAC document shows that the total exchange rate differential due stood at N10.499tn.
However, N2.756tn was recovered between November 2023 and September 2024, leaving an outstanding balance of N7.74tn.
The debt represents 14.07% of the proposed N54.99tn 2025 national budget.
Month-by-month figures illustrate the rapid accumulation of the debt.
The balance stood at N1.29tn in May 2023 and rose steadily, reaching N7.74tn by September 2024.
This increase correlates with fluctuations in foreign exchange rates, which directly impact fuel import costs.
On May 29, 2023, President Bola Tinubu declared the end of fuel subsidies.
However, international financial institutions, including the International Monetary Fund and the World Bank, have suggested that subsidies were quietly reinstated through backdoor mechanisms.
A proposed economic stabilisation plan in June 2024 indicated that N5.4tn was earmarked for fuel subsidies, contradicting the government’s earlier stance on subsidy removal.
Energy expert Wumi Iledare criticised NNPCL’s demand for reimbursement, questioning why the company—acting as the government’s oil sales agent—should require compensation for exchange rate fluctuations.
He argued that NNPCL, like international oil companies, should remit funds to the government without expecting repayment.
According to Iledare, NNPCL’s role as an oil marketer complicates the subsidy debate.
“If the argument is about under-recovery, it implies that NNPCL spent dollars to import fuel and now expects naira reimbursement, which raises fundamental financial concerns,” he said.
The FAAC meeting also exposed inconsistencies in NNPCL’s revenue reporting. Ogun State Accountant-General, Tunde Aregbesola, raised concerns over a significant drop in remitted revenue compared to November 2024 figures.
According to him, financial records indicated that receivables from NNPCL stood at N10.8tn, but discrepancies suggested ongoing reconciliation issues.
FAAC Chairman, Oluwatoyin Madein, confirmed that reconciliation efforts were underway between NNPCL and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Stakeholders are pushing for a timeline to conclude the reconciliation process, which is expected to cover financial records up to December 2024.
The controversy surrounding NNPCL’s subsidy claims, coupled with concerns about revenue transparency, underscores broader fiscal challenges as Nigeria navigates its post-subsidy economic landscape.
