Nigeria’s fuel subsidy debt surges to N7.74tn despite deregulation
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Nigeria’s federal government faces mounting pressure over a staggering N7.74tn fuel subsidy debt owed to the Nigerian National Petroleum Company Limited (NNPCL), despite claims that the country had moved past its subsidy era. The debt, which stems from exchange rate differentials on petrol imports, accumulated between June 2023 and September 2024, when full deregulation of the downstream oil sector was implemented.
A document presented by the NNPCL to the Federation Account Allocation Committee (FAAC) at its February meeting in Abuja—seen by The Guardian—revealed that the government is working on a 210-day plan to settle the outstanding amount. The company had earlier demanded a refund of N4.71tn, citing costs incurred from importing petrol.
While President Bola Tinubu, in his May 2023 inauguration speech, famously declared that “subsidy is gone,” reports from the International Monetary Fund (IMF) and World Bank have suggested otherwise. A proposed economic stabilisation plan in June 2024 indicated that the government intended to spend N5.4tn on fuel subsidies—contradicting official claims of market deregulation.
Exchange rate pressure and fiscal strain
The NNPCL’s claim is largely based on exchange rate differentials—the financial gap between projected and actual costs of importing fuel. In a volatile foreign exchange market, the cost of procuring petrol fluctuated sharply, pushing the oil company to absorb losses now being presented for reimbursement.
Breakdowns from the FAAC document show the escalating burden: the total exchange rate differential stood at N10.5tn, but N2.76tn was recovered between November 2023 and September 2024, reducing the outstanding amount to N7.74tn. This figure represents 14% of Nigeria’s N54.99tn 2025 national budget.
From June 2023, the debt climbed month by month, from N1.29tn to N7.74tn in September 2024, with no immediate sign of a resolution. Experts have warned that the repayment plan could have severe implications for public finances, exacerbating Nigeria’s already strained revenue outlook.
Questions over NNPCL’s claims
The NNPCL’s demands for reimbursement have sparked debate among economists and policymakers. Wumi Iledare, an energy expert, questioned why the oil company was seeking government compensation when it sells crude oil on behalf of the state in foreign currency.
“It is very difficult to understand why the federal government has to return any money to NNPCL,” he told The Guardian. “If you look at the taxes paid by international oil companies, they remit royalties to the government. NNPCL should do the same.”
He added that if the claims relate to under-recovery—where NNPCL spends dollars on fuel imports and receives naira reimbursements—then the matter is even more complex. “By the way, the federal government is not necessarily the owner of NNPCL; it belongs to the federation,” he pointed out.
Revenue inconsistencies raise alarm
The financial strain on government coffers has raised concerns within the FAAC. Members of the committee have expressed frustration over inconsistent revenue reporting by the NNPCL. The Ogun State Accountant-General, Tunde Aregbesola, highlighted discrepancies in November 2024 revenue inflows and questioned the accuracy of the oil firm’s financial disclosures.
“If the N10.8tn in receivables from NNPCL is confirmed, it would significantly impact Nigeria’s overall financial outlook,” Aregbesola warned.
In response, FAAC Chairman Oluwatoyin Madein assured committee members that the matter was under review. However, concerns remain over the length of time required for reconciliation and the transparency of the process.
As Nigeria grapples with economic uncertainty, the unresolved subsidy debt and the true extent of government intervention in fuel pricing remain contentious. While authorities maintain that market forces will dictate pricing, the NNPCL’s demand for reimbursement tells a different story—one where subsidies may not be gone after all.
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