The Federation racked up a record N17.5 trillion debt to the Nigerian National Petroleum Company Limited (NNPC) in the 2024 financial year for pipeline protection, under-recovery on petrol, and other energy-security operations undertaken by the national oil company.
The figure – contained in NNPC’s newly released 2024 consolidated financial statements – has triggered widespread public concern, with economists and industry analysts demanding a full forensic audit of the spending.
Breakdown of the N17.5trn Cost
Findings show that N7.13 trillion of the expenditure was incurred as energy-security costs to keep petrol prices stable whenever the gap widened between the exchange rate and the ex-coastal cost of imported fuel.
Another N8.67 trillion was spent directly on under-recovery – the financial shortfall that arises when the regulated pump price of petrol is lower than the actual landing cost.
In addition, N8.84 trillion was recorded under Other Receivables from the Federation, representing advance payments made by NNPC and additional security spending on the protection of oil and gas installations.
The 2024 figure nearly doubled the N9.36tn recorded the previous year, signalling rising fiscal strain as the nation battles crude theft, vandalism, and volatile exchange rates.
Legal Basis and Contradictory Realities
Under Section 64(m) of the Petroleum Industry Act (PIA) 2021, the Federation is responsible for reimbursing NNPC for energy-security costs incurred as the supplier of last resort.
But the latest disclosures complicate President Bola Tinubu’s May 2023 declaration that “fuel subsidy is gone.” With under-recovery costs now at multi-trillion-naira levels, the financial statements indicate that government support for petrol pricing has in effect continued.
The report also confirmed that the year opened with an under-recovery balance of N6.21 trillion, up sharply from N2.06 trillion in 2023, and that total energy-security debts owed to NNPC climbed to N8.67 trillion by December 31.
NNPC Posts Record Profit Despite Rising Debts
Despite the heavy financial burden on its books, NNPC announced a Profit After Tax (PAT) of N5.4 trillion for 2024, its strongest performance since becoming a limited liability company. The company’s PAT represents a 64% increase from the N3.297 trillion reported in 2023.
Proshare, a Nigerian financial intelligence platform, described the performance as “strong and commercially encouraging,” citing an 87.89% growth in total revenue, driven largely by higher crude oil production and improved operational efficiency.
Crude sales alone surged to N29.21 trillion, more than double the previous year’s figures, while natural gas and power revenues rose by 125.66%.
However, Proshare warned that the company’s rising finance costs and shrinking gross margins demand cautious oversight.
Stakeholders Demand Probe
The massive security-related expense has drawn sharp criticism from experts, who question the transparency and justification for such spending.
Jeremiah Olatide, CEO of Petroleumprice.ng, described the N17.5 trillion bill as “outrageous and indefensible,” accusing the national oil company of masking deep inefficiencies and internal collusion.
“N17.5 trillion spent on pipeline security and energy-security costs in a single year is outrageous and should be probed,” he said. “How do you justify such a humongous expense when production remains around 1.4–1.5 million barrels per day?”
He argued that despite years of security spending, crude oil theft, pipeline vandalism, and sabotage remain rampant.
A critique, Kelvin Emmanuel, public finance analyst and co-founder of Dairy Hills, alleged that the government has been compensating militant groups with crude supplies under the guise of pipeline surveillance agreements.
Writing on X, Emmanuel said: “Now that NNPC’s financial statement shows that N7.1 trillion was disbursed in 2024 from supposed subsidy savings for pipeline security contracts, I am sure the 78,000 to 110,000 barrels per day is now confirmed.”
He called for open contracting, third-party verification of all security-related payments, and a complete overhaul of the current pipeline protection framework.
Repayment Uncertain
The financial documents do not indicate whether the Federal Government has refunded any portion of the mounting amount owed to NNPC. With debts nearly doubling in a single year, analysts warn that delayed reimbursements could weaken NNPC’s liquidity and ultimately shift the financial burden to the Nigerian public.
Rising Pressure on Nigeria’s Oil Sector
As the country struggles with declining output, deteriorating infrastructure, and persistent under-recovery of fuel costs, stakeholders insist that transparency, accountability, and reform of the national security and subsidy systems are now unavoidable.
With the national oil company carrying the cost of government-mandated fuel pricing and security operations, experts say Nigeria’s energy future hinges on bold policy decisions – and a willingness to confront long-standing distortions in the petroleum sector.