The Nigerian National Petroleum Company Limited (NNPC) is projecting unprecedented revenue and profit growth, yet this rosy financial veneer obscures a labyrinth of hidden liabilities that threaten the fiscal foundations of the Nigerian economy. According to a report from SBM Intelligence, while headline profits suggest a successful commercial transition, the underlying debt burdens present a severe sovereign risk. For an economy battling currency volatility and inflationary pressures, the opacity of the national oil company’s balance sheet undermines the core tenets of the “Renewed Hope” agenda, which relies heavily on transparent hydrocarbon revenues to fund critical infrastructure and stabilize macroeconomic indices.
The statistical divergence highlighted by SBM Intelligence is stark. The report details a trajectory of robust top-line growth, with NNPC’s revenue climbing from ₦23.9 trillion in 2023 to ₦31.5 trillion in 2024, and projected to reach ₦35.2 trillion by the end of 2025. Concurrently, profit after tax is forecasted to rise from ₦3.3 trillion to a staggering ₦5.1 trillion over the same period, maintaining a steady profit margin of approximately 14 percent. However, these figures are fundamentally compromised by the revelation of over ₦6.3 trillion in off-balance-sheet commitments recorded in the 2023 financial year. These unrecorded obligations include a crippling $6 billion debt to international refiners (equivalent to roughly ₦5.4 trillion) and nearly $989 million in cash commitments tethered to forward crude sale agreements.
The accumulation of such massive, obscured debt carries profound implications for Nigeria’s sovereign risk profile and its attractiveness to global capital. When the primary engine of national revenue is burdened by forward-sold assets and opaque liabilities, foreign direct investment in the broader Oil and Gas sector is naturally deterred. Recent financial disclosures indicating that the debts of NNPC’s subsidiaries have soared to over ₦30 trillion have triggered intense scrutiny from independent financial analysts and industry experts. Commenting on the situation in January 2026, prominent petroleum economist Prof. Wumi Iledare stated that the escalating debt profile “reflects weak commercial discipline and governance issues” within the organization. This external assessment underscores the reality that structural inefficiencies persist despite the corporation’s rebranding under the Petroleum Industry Act.
In response to these fiscal anomalies and the continuous hemorrhage of potential national revenue, the Federal Government has been forced to intervene directly. The administration recently signed a sweeping Executive Order designed to bypass NNPC’s traditional deduction mechanisms and mandate the direct remittance of oil and gas revenues into the Federation Account. Defending this aggressive policy shift on Wednesday, presidential spokesperson Bayo Onanuga explained that the primary objective is to “eliminate unjustified multiple layers of deductions that erode revenues that ought to accrue to the Federation Account”. By stripping the company of its 30 percent management fee and the 30 percent Frontier Exploration Fund allocations, the government is attempting to reclaim liquidity that has historically been trapped within NNPC’s opaque corporate structure.
Returning to the SBM Intelligence data, the internal expenditure patterns of NNPC further illustrate the disconnect between its declared profits and its operational efficiency. Despite the crushing weight of its liabilities, the company’s personnel costs are projected to jump from ₦0.48 trillion in 2024 to ₦0.545 trillion in 2025. Furthermore, statutory and discretionary donations covering host community trusts, security support, and educational scholarships have surged exponentially, rising to a projected ₦0.208 trillion in 2025. This rising corporate social spending, coupled with ₦18.14 billion set aside for litigation, points to a bloated operational model that drains capital away from essential core investments like pipeline infrastructure and domestic refining capacity.
The interplay between NNPC and the federal government also reveals a destructive cycle of circular debt that heavily impacts national liquidity. The SBM report notes that the federal government owes NNPC approximately ₦5.1 trillion in outstanding petrol subsidy reimbursements. While the recovery of this receivable would technically bolster the company’s asset base, it highlights the deeply intertwined and dysfunctional financial relationship between the sovereign and its national oil company. As NNPC struggles to service its multibillion-dollar debts to external refiners, its ability to ensure consistent domestic fuel supply is jeopardized. This logistical vulnerability directly feeds into national inflation, as supply chain disruptions and volatile pump prices increase the cost of transportation and suppress industrial productivity across the country.
Moreover, the practice of leveraging forward sale agreements to generate immediate cash flow effectively mortgages Nigeria’s future hydrocarbon production. This strategy leaves the national treasury acutely vulnerable to future oil price shocks, as a significant portion of upcoming crude output is already committed to servicing existing debt rather than funding the national budget. As international observers have continuously noted, the failure to fully remit oil earnings undermines macroeconomic stability and exacerbates the country’s foreign exchange crisis. A transparent, commercially viable NNPC is non-negotiable for the stabilization of the Naira and the long-term success of the administration’s economic reforms.
The juxtaposition of record-breaking paper profits against towering hidden liabilities reveals that NNPC’s evolution into a globally competitive entity remains dangerously incomplete. The recent executive actions to centralize revenue collection indicate that the presidency can no longer afford the luxury of fiscal opacity in its most critical sector. Moving forward, enforcing strict commercial rules and settling these systemic debts will be paramount. True economic resilience will require moving beyond superficial profit declarations to establish a genuinely transparent fiscal architecture, ensuring that the wealth generated by Nigeria’s natural resources effectively translates into sustainable national development rather than servicing an endless cycle of institutional debt.
