The Federation has accumulated a massive N17.5tn debt owed to the Nigerian National Petroleum Company Limited for pipeline protection and energy-security operations the oil company undertook on the nation’s behalf in the 2024 financial year.
Analysts are now calling for a forensic audit of the spending, raising concerns over persistent leakages, weak crude production, and a lack of transparency surrounding NNPC’s energy-security and pipeline protection costs.
According to NNPC’s 2024 consolidated financial statements, N7.13tn of the total spending went specifically to energy-security costs aimed at stabilising petrol prices when the gap between the exchange rate and ex-coastal price of refined petrol widened.
A sizeable portion of the expenditure also covered efforts to safeguard Nigeria’s vital oil and gas infrastructure—pipeline surveillance, repairs, anti-theft operations, and other security measures to ensure uninterrupted national energy supply.
On Monday, NNPC declared a N5.4tn profit after tax for 2024—one of its strongest performances since becoming a limited liability company. The figure marks a 64 per cent jump from the N3.297tn posted in 2023, driven by higher production volumes, cost-cutting, and improved operational efficiency.
The company disclosed that N8.67tn of the total amount represented under-recovery on refined petroleum products—highlighting the significant financial strain of maintaining regulated petrol prices. Under Section 64(m) of the Petroleum Industry Act 2021, such energy-security costs must be borne by the Federation since NNPC serves as the “supplier of last resort.”
Under-recovery, which arises from the difference between the actual landing cost of petrol and the regulated selling price, rose sharply in 2024. The year opened with an under-recovery balance of N6.25tn, and energy-security costs jumped to N7.13tn, up from N4.843tn in 2023. By year-end, the amount owed under energy-security expenses had climbed to N8.67tn, representing a 38.7 per cent increase.
Another N8.84tn was recorded as “Other Receivables from Federation,” covering advances to the Federal Government and additional security-related costs under a framework allowing NNPC to incur such expenses upfront and recover them later.
The disclosures further cast doubt on President Bola Tinubu’s May 29, 2023 proclamation that “fuel subsidy is gone,” as the figures indicate continuing government support for petrol pricing.
The N17.5tn owed in 2024 nearly doubles the N9.36tn recorded in 2023, intensifying pressure on NNPC’s cash flow amid regulated pricing, exchange-rate instability, and rising operational costs. The company’s documents did not indicate whether the government had refunded any part of the debt or provide clarity on repayment timelines.
Stakeholders warn that without transparent and timely reimbursement, the burden may eventually be borne by NNPC—and ultimately, Nigerian consumers.
Meanwhile, throughput charges climbed to N145.7bn in 2024, reflecting payments to private depot owners, while marketing and distribution expenses covered product transportation to domestic and international depots.
Proshare, a leading financial research platform, described NNPC’s 2024 results as “strong and commercially encouraging,” with total revenue surging by 87.89 per cent to N45.08tn. Crude oil sales more than doubled to N29.21tn, driven by improved production and stabilised exports. Revenue from petroleum products rose 35.39 per cent, natural gas and power jumped 125.66 per cent, and services climbed 110.88 per cent.
Despite the strong performance, Proshare cautioned that rising finance costs, narrowing margins, and increasing debt ratios warrant close monitoring. It added that sustaining growth under the Petroleum Industry Act will require disciplined execution, tighter working-capital management, and strategic navigation of both domestic and global energy markets.
