The Federal Government has approved the write-off of nearly $5 billion in debts owed by the Nigerian National Petroleum Company Limited (NNPC).
The development is seen as a strategic move to clean up the firm’s balance sheet ahead of a planned Initial Public Offering (IPO) in 2028.
According to a new report by energy intelligence provider Argus, the debt cancellation forms part of broader reforms aimed at boosting transparency and attracting foreign investment into Nigeria’s oil and gas sector.
On Monday, December 29, the Presidency confirmed that President Bola Tinubu had approved the write-off of NNPC’s dollar-denominated debts totalling $1.42bn and domestic liabilities amounting to ₦5.57 trillion.
The combined sum, at prevailing exchange rates, represents approximately $5bn in total debt relief for the national oil company.
The debts cover a range of obligations, including:
- Production sharing contracts under which NNPC acts as concessionaire for the federation.
- Domestic crude supply obligations.
- Repayment agreements.
- Modified carry arrangements.
- Unpaid royalties.
Naijaonpoint reports that while the government acknowledged the total amount cleared, it did not provide a breakdown of which debts were denominated in naira or US dollars.
Argus, quoting industry sources, reported: “The government is readying NNPC for a 2028 initial public offering. These debts were linked to production sharing contracts in which NNPC represents the government as concessionaire, domestic supply obligations, repayment agreements, modified carry arrangements, and royalties. It did not say which were dollar-denominated and which were in naira.”
NNPC has long signalled plans to go public. Following its commercialisation under the Petroleum Industry Act (PIA), the firm had announced its intention to list a portion of its shares.
In early 2025, the company began the process of hiring IPO advisers, issuing houses, and investor relations consultants.
Potential listing venues being considered include Lagos, London, and New York, with an offering that could see up to 20% of the company’s equity sold to investors.
However, clearing long-standing financial obligations is a crucial step in preparing for any IPO. Potential investors are likely to demand transparency and a clean financial slate as prerequisites for participation.
$42.4bn Legacy Debt Remains Unresolved
Despite the recent write-off, Argus noted that the Federal Government has not extended the debt cancellation to an estimated $42.4bn in legacy liabilities from the period between 2011 and 2017. According to authorities, these debts remain disputed and unresolved.
In its response, NNPC has consistently stated that it owes the government nothing for that period.
“NNPC says it remitted all revenue due and owes nothing to the government for that period,” the report said.
Similarly, debts accrued between January and October 2025 have not been forgiven.
The government confirmed that only debts up to December 2024 have been cleared.
“NNPC’s debts to the government for January-October 2025 remain outstanding and are actively being tracked and recovered,” it said.
$5bn Loan from Aramco
While cleaning up its books, NNPC is also negotiating fresh financing. According to Argus, industry sources revealed that the company is in talks with Saudi Arabia’s state-owned oil firm, Aramco, for a $5bn crude-backed forward-sale loan.
Under the proposed structure, an NNPC-created Special Purpose Vehicle (SPV) named Green Falcon would secure the loan. The SPV will use the funds to purchase discounted crude oil from NNPC under a forward-sale agreement.
Green Falcon would then repay Aramco and cover other associated costs through proceeds generated from reselling the crude oil.
Argus quoted an NNPC source as saying: “NNPC is in the process of taking on sizable new debt, with talks ongoing for a $5bn crude-backed, forward sale loan from Saudi state-controlled Aramco. A special purpose vehicle created by NNPC, called Green Falcon, will take the Aramco loan to buy discounted crude barrels from NNPC under a forward sale agreement.”
Part of New Loan to Settle Project Gazelle Debts
Part of the Aramco loan is expected to be used to pay down existing obligations linked to an earlier crude-backed forward-sale deal known as Project Gazelle.
Under the Gazelle structure, NNPC had raised $3.2bn out of a planned $3.3bn by borrowing from oil traders through what was described as an “accordion” arrangement.
The funds were originally intended to support operational expenses and to enable the company to pay royalties and dividends to the government in advance.
Naijaonpoint reports that the Federal Government now faces a balancing act: reducing NNPC’s debt load to make it investor-ready, while also enabling the company to raise new funds for operations and existing obligations.
The combination of debt forgiveness and new loans underscores the financial restructuring underway at the oil giant as Nigeria looks to reposition NNPC as a modern, commercially driven energy company capable of competing on the global stage.