2025 AFS: Alliance Raises Posers over NNPC’s N11.2tn Federation Receivables

• Demands breakdown of advances, security costs, petrol price support 

•Research group seeks public ledger for dividends, taxes, others

Emmanuel Addeh in Abuja

The Alliance for Economic Research and Ethics (AERE) yesterday urged the Nigerian National Petroleum Company Limited (NNPC) to explain the N11.2 trillion owed to it by the federation, raising fresh concerns over the transparency of the company’s oil revenue accounting.

In a policy analysis, the group said that the broad accounting classification made it difficult for Nigerians to establish precisely how much was attributable to physical asset protection, petrol price support arrangements and other advances.

The analysis came as NNPC reported a profit after tax of N7.183 trillion for 2025, up from N5.414 trillion in the preceding year, declaring a dividend of N5.8 trillion and recorded peak crude oil and condensate production of 1.77 million barrels per day.

But while acknowledging the reported improvements, the Dele Oye-led AERE argued that the figures should be accompanied by a clearer account of how revenue was generated, how obligations were settled and how much cash was actually remitted to the federation.

AERE said despite attempts at transparency, the disclosures did not invalidate the reported profit but made it necessary to distinguish earnings generated by core operations from other income and accounting adjustments.

“When a company’s profit grows while core revenue and gross profit retreat, citizens deserve to know which cash-generating operations did the lifting, which accounting estimates moved, and which one-off items may not return,” the report stated.

The group drew attention to note 24.2 of NNPC’s 2025 accounts, which said it recorded no energy-security expenses during the year, but showed an opening energy-security receivable of N8.672 trillion, carried forward from 2024.

The reconciliation, according to AERE, reduced total federation receivables from N17.512 trillion to N11.201 trillion.

However, the group said the exercise did not resolve the underlying transparency concerns because the published accounts did not provide a sufficiently detailed breakdown of the remaining balance by purpose and beneficiary.

It called for a public reconciliation separating physical security expenditure, supplier-of-last-resort obligations and petrol price under-recovery arrangements, as well as advances to the federation.

Each category, it said, should disclose the legal authority for the claim, the beneficiary, supporting invoices, whether cash had changed hands or obligations had been offset, and the measurable results delivered.

The analysis also questioned the presentation of pipeline maintenance expenditure in NNPC’s accounts, noting that the specific pipeline maintenance line fell sharply from N149.478 billion in 2024 to N13.813 billion in 2025, a decline of about 90.8 per cent.

However, AERE cautioned against interpreting the reduction as proof that physical maintenance had collapsed.

It noted that other direct costs rose from N566.540 billion to N1.277 trillion during the period, with NNPC indicating that the broader category included the maintenance and operation of wells, production facilities, pipelines and processing infrastructure, alongside integrity management, repairs and field support.

The group said the figures left unanswered whether maintenance work had been postponed, reclassified into other cost centres or carried out more efficiently.

It urged NNPC to publish an asset-integrity scorecard for major trunk pipelines, detailing planned and actual maintenance, incidents, downtime, integrity expenditure and independent inspection results.

The analysis also called for greater transparency around NNPC’s N5.8 trillion dividend declaration, arguing that Nigerians needed to know how much had actually been paid in cash, how much had been offset against other obligations and how much remained outstanding.

It said a clear reconciliation of declared dividends, cash payments, netted obligations and outstanding receivables would enable citizens to establish the extent to which the company’s reported earnings translated into actual receipts for the federation.

Beyond the federation receivable, AERE highlighted NNPC’s forward-sale obligations, which it said stood at N8.25 trillion at the end of 2025, forming the bulk of total contract liabilities of N8.69 trillion.

The report explained that such liabilities generally represented consideration received for which the company still had outstanding performance obligations, including future deliveries under forward-sale arrangements.

It cautioned that the obligations did not automatically constitute misconduct or conventional borrowing but could constrain the volume of future production available for fresh policy decisions.

The group also revisited the substantial sums committed to rehabilitating Nigeria’s state-owned refineries, arguing that public assessments should focus on independently verified performance rather than announcements and commissioning ceremonies.

It cited historical approvals of $1.5 billion for the Port Harcourt refinery and approximately $1.48 billion combined for the Warri and Kaduna refineries, alongside subsequent reporting on rehabilitation expenditure and the brief operations of some facilities following their relaunches.

AERE said the NNPC agreement should be treated as an initial step rather than evidence that the rehabilitation challenge had been resolved.

It called for the publication of rehabilitation contracts, milestones, accepted work, performance bond status, liquidated damages, claims pursued and recoveries made, alongside an independently verified 90-day operating test.

AERE proposed that payments to refinery operating partners be tied to independently measured throughput, plant availability, safety and product quality sustained over an agreed period.

It also advocated performance bonds and an output-based escrow arrangement under which a portion of contractors’ compensation would be released only after facilities met specified operating targets.

To address the issues, the research group proposed five measures, including a quarterly federation receivables ledger, a crude commitments register with a 24-month forward view, and a cash-and-offset reconciliation covering NNPC dividends and federation remittances.

It also recommended independent asset-integrity assessments for critical pipelines and refineries, as well as publicly verified refinery performance tests before rehabilitation projects are declared successful.

The proposed receivables ledger, it said, would distinguish between advances to the federation, physical asset-security expenditure and supplier-of-last-resort or petrol price under-recovery claims.

The crude commitments register, meanwhile, would disclose forward-sale obligations and domestic supply allocations, while allowing commercially sensitive pricing information to receive appropriate protection.

AERE said the measures would help Nigerians distinguish between reported profits, cash remittances, accounting offsets and outstanding obligations.

It maintained that NNPC’s 2025 accounts contained significant reported achievements in profitability and production but also highlighted the need for clearer disclosure of the company’s financial relationship with the federation.

“The N11.2 trillion figure is not proof that N11.2 trillion was spent on security in 2025. It is a very large federation receivable whose composition deserves a public ledger,” the analysis stated.