By Springs News NG Media Limited

The Nigerian government has officially confirmed plans to settle a fuel subsidy debt of N7.74 trillion owed to the Nigerian National Petroleum Company Limited (NNPCL). The debt, arising from exchange rate differentials on Premium Motor Spirit (PMS) imports, accumulated between June 2023 and September 2024, during the full deregulation of Nigeria’s downstream oil sector.

Breakdown of the Fuel Subsidy Debt

According to a document presented by NNPCL to the Federation Account Allocation Committee (FAAC) in February 2025, the initial subsidy debt stood at N10.499 trillion. However, N2.756 trillion was recovered between November 2023 and September 2024, reducing the outstanding balance to N7.74 trillion. The month-by-month debt accumulation was detailed as follows:

• June 2023 – N1.402 trillion
• July 2023 – N1.48 trillion
• October 2023 – N1.81 trillion
• March 2024 – N4.68 trillion
• June 2024 – N6.97 trillion
• September 2024 – N7.74 trillion

This subsidy debt accounts for 14.07% of Nigeria’s N54.99 trillion 2025 national budget.

Government’s Repayment Plan

The government has outlined a 210-day timeline to clear the outstanding amount, according to official documents. This move follows reports that NNPCL had requested a N4.71 trillion refund in August 2024 under the category of “Exchange rate differential on PMS and other joint venture taxes.”

Understanding the Exchange Rate Differential: This debt stems from fluctuations in currency value, where the government covered the difference between the official exchange rate and the actual cost incurred by NNPCL for fuel imports.

Fuel Subsidy Removal and Reintroduction Claims

Although President Bola Tinubu declared an end to the fuel subsidy in May 2023, reports from the International Monetary Fund (IMF) and World Bank suggest that subsidy payments continued through price stabilization measures.

Controversies Surrounding the Payment

Energy expert Wumi Iledare questioned the rationale for reimbursing NNPCL, arguing that the company should remit oil revenues to the government instead of receiving refunds.

“If NNPCL sells crude oil for the government and provides dollar revenue, why should the government refund any money? NNPCL should be remitting funds like other oil companies,” Iledare asserted.

Similarly, FAAC committee members have raised concerns over inconsistencies in NNPCL’s revenue reporting. Ogun State Accountant-General, Tunde Aregbesola, highlighted a significant drop in revenue remitted by the oil company, citing an outstanding N10.8 trillion in receivables.

FAAC Chairperson Oluwatoyin Madein assured that a reconciliation committee is reviewing the figures to ensure transparency.

Economic Concerns and Future Implications

Despite the government’s commitment to clearing the N7.74 trillion debt, economic analysts warn that Nigeria must adopt sustainable economic policies to avoid future subsidy-related liabilities. With rising inflation and fluctuating foreign exchange rates, experts argue that structural reforms are necessary to prevent another cycle of subsidy accumulation.

For more updates on Nigeria’s economic policies and fuel subsidy issues, stay tuned to Springs News NG.