Business
Petroleum Sector Retards National Progress
NNPCL is the only state-owned oil producing organization in the entire world which has become a perpetual drag on the nation’s progress. Last week, just as the nation was celebrating the declaration of Ntn profits from operations last year, Nigerians were once again reminded that very little has changed in the management of the affairs of the most important business organization in Nigeria. Until new evidence surfaces indicating a new re-orientation of corporate governance, the NNPCL will find it difficult to shed its negative image. For the most part, nothing seems to work well in the organization.
“Power tends to corrupt; and absolute power corrupts absolutely.”
Lord Acton, 1834-1902.
Late President Yar’Adua and former President Jonathan appointed Ministers who served themselves more than Nigeria, and, although they were not well supervised, the two Presidents were personally above reproach with regard to the operations of the NNPC. Failure to ensure that the mandatory Turn Around Maintenance, TAM, was carried out, as and when due was the only error which can be justifiably charged to their accounts.
Buhari returned Nigeria to the discredited President/Minister approach to governance. It was a monumental disaster. Unlike when he was Petroleum Minister in 1973 and left office in a cloud of financial uncertainty, the sector had become highly technical; and only very few people in any country could successfully manage it. Buhari was not one of them.
He left an unmitigated disaster behind. One of them was the N8tn Crude-for-Loans agreement reached to finance budget deficits incurred by the FG. Under the agreements, 213,000 barrels of crude oil were daily reserved to service the loans.
Given that, at the time, daily output of crude was about 1.4 million barrels a day, daily net production was under 1.2 million barrels each day. Meanwhile, the budgets each year were based on 2 million barrels per day; and later, Alhaji Dangote was promised all the crude required to run his 600,000 barrels refinery. TAMs were not carried out; petrol was imported in large quantities and fuel subsidy payments escalated to untenable proportions. The stage was set for our present predicament.
“828M litres of fuel imported to avert nationwide shortage.” News, December 1, 2025.
Tinubu came into office and applied a shock treatment to the economy which almost killed the patient. Divinely, the nation survived the therapy is now gradually getting out of the intensive care unit. A recovery is now underway – even if tentative. Still, it is undeniable that the economy might be turning the corner. The Organised Private Sector, OPS, has demonstrated resilience, once again, as it did when the Structural Adjustment Programme, SAP, was introduced in the 1980s. There is faint light at the end of the dark tunnel. There is however, an elephant in the room – NNPCL.
Notwithstanding the profits recently declared by the company, the overall performance this year has been underwhelming.
The news report in reference touched on some of the problems. According to the reporter, “Fuel security slowed in October as the Dangote Petroleum Refinery supplied only an average of 17.1 million litres per day of the nation’s petrol needs, forcing the country to rely heavily on imports, despite earlier hopes of self-sufficiency.”
In reality, the hope of self-sufficiency which was based on the assumption that Dangote would be fully supplied with crude was delusory at best. Dangote’s refinery could not attain full capacity in 2025; even if the crude promised was fully delivered. Furthermore, Dangote was not expected to be the sole supplier of petrol to Nigerians. NNPCL, under the former Group Managing Director, Mele Kyari, requested for and was given $2.9 billion to revive the Port Harcourt and Warri refineries; and get them to start supplying fuel. Promises were made to start production by December 2024.
We are now in December 2025. After months of shameless deceit, including reported supply of fuel by the two refineries, Nigerians woke up to the truth. Funds provided for another TAM by NNPCL had vanished with no fuel being produced. That has been the history of the NNPCL since all the four refineries produced petrol during the Babangida administration – a feat which has not been repeated by any other government since 1993.
The NNPC(L) has consistently duped Nigeria because our governments have repeatedly appointed untrustworthy individuals to manage the business. Their crimes have been overlooked by Presidents and the National Assembly for reasons most of us can only guess because nobody has been prosecuted in Nigeria yet.
NNPC(L) ROBIN HOODS
Robin Hood, the famed fairy tale English robber, took from the rich to give to the poor.
Meanwhile, two former Directors of the NNPC(L) have been successfully prosecuted and sentenced in the United States for stealing Nigerian money and laundering the proceeds of crime in the US. The funds stolen in Nigeria were forfeited to American states. The robbers of NNPC(L) rob Nigeria to enrich wealthy nations even more.
CRUDE PRODUCTION PROMISES UNFULFILLED
“Promises like [cookies] are made to be broken.” Jonathan Swift, 1667-1745.
Nothing is more dangerous than a convincing illusion. Nigerian governments have operated on one for over ten years; and NNPC(L) was responsible for it. Nigeria’s budgets in the last twelve years have been based on two million barrels per day crude oil production. NNPC(L) directors invariably accept the budget estimates for crude production. In no single month was the target achieved. That fact has never stopped NNPC(L) from repeating the same promise to Presidents – who were too eager to be deceived. The repercussions have been devastating.
Expected crude oil revenue estimates were never achieved; the increasing negative variances generated were largely responsible for the escalating national debt – of which the N8tn is just a small fraction. Question is: when will NNPC(L) play a positive role?
The steady rise in the pump price of Premium Motor Spirit (PMS), commonly known as petrol, has intensified economic hardship across Nigeria, with prices climbing to nearly N1,400 per litre in several parts of the country, triggering widespread anxiety among transporters, commuters, and businesses.
Findings across major cities indicated that the latest surge, driven largely by rise in the price of crude oil, is shrinking incomes, inflating transport fares, and worsening the cost-of-living crisis for millions of Nigerians.
With the price of crude oil hitting almost $120 per barrel last week before settling at $112 over the weekend as the Middle East crisis rages, Dangote also adjusted its gantry price from N1,175 to N1,245 per litre.
In response to the latest increase, marketers also adjusted pump prices across the country with new prices ranging from N1,310; N1,325; N1,370 and N1,400 per litre depending on locations.
In Lagos, commercial drivers say the rapid increase in fuel prices is eroding their profits and threatening their livelihoods. At several filling stations, prices fluctuated between N1,320 and N1,330 over the weekend, with some outlets briefly selling as high as N1,380 before adjusting downward.
At stations operated by the Nigerian National Petroleum Company Limited (NNPCL), pump prices were revised upward twice within days, reflecting the volatility in the downstream sector.
Toheeb Sulaimon, a commercial driver operating along the Ogba–Ikeja route, said his daily earnings have dropped drastically due to rising fuel costs and declining passenger traffic.
“When fuel was around N800 per litre, I could spend about N9,000 on fuel and still make up to N30,000 in a day. Now, everything has changed. The cost has doubled, but passengers are fewer,” he said.
Maduka Chibo, another operator, said his daily fuel expenditure has risen sharply to over N20,000, compared to about N10,000 when petrol sold at N800 per litre.
Northern cities hit N1,390
In Kano, petrol prices climbed as high as N1,390 per litre, with several independent marketers adjusting their rates upward in response to supply costs.
Stations such as AA Rano and others revised prices from around N1,330 to between N1,385 and N1,390.
The increase has triggered a ripple effect on transportation, with commercial tricycle operators hiking fares significantly.
A resident, Ismail Mabo, recounted being charged N4,000 for a trip that would normally cost about N1,000, accusing operators of exploiting the situation.
Another resident, Abba Kabir, warned that the sustained rise in fuel prices could force many car owners to abandon their vehicles.
“At this rate, people will stop using their cars. Some may even convert them to commercial use just to survive,” he said.
Abuja, Kwara record fresh hikes
In Abuja, pump prices have also surged, with several filling stations now selling between N1,361 and N1,370 per litre. The increase followed a fresh pricing template issued by MRS Oil Nigeria Plc to its dealers, signaling a new benchmark for the market.
The company pegged its pump price at N1,332 per litre, with variations depending on delivery and collection terms, further highlighting the influence of supply chain costs.
Across filling stations in the Federal Capital Territory, prices have continued to edge upward, deepening concerns among residents already grappling with high living expenses.
In Ilorin, Kwara State, the situation is no different. A survey showed petrol selling between N1,295 and N1,343 per litre, depending on the outlet.
Residents say the persistent increases are stretching household budgets to the limit. Oladuni Lateefat, a civil servant, said her family’s daily expenses have surged beyond manageable levels.
“What we used to manage with N4,000 daily is no longer enough. Transportation alone is taking a huge part of our income,” she said, adding that she may stop using her car to commute.
Businesses are also feeling the impact. A cement dealer in Ilorin reported that rising fuel costs have already pushed up the price of cement by N500, with fears of further increases.
South-South faces black market surge
In Port Harcourt and Yenagoa, petrol prices have risen to between N1,300 and N1,400 at official stations, while black market rates have soared as high as N1,800 per litre.
The disparity has worsened the burden on residents, particularly in areas where access to formal filling stations is limited.
Commuters say transport fares have doubled in some cases. A trip that previously cost N300 to N400 in Port Harcourt now goes for as much as N700, reflecting the direct pass-through effect of fuel costs.
Similarly, inter-state transport fares have increased, with journeys such as Yenagoa to Uyo rising from about N9,000 earlier in the year to N11,000.
The Nigerian National Petroleum Company Limited (NNPCL) has reduced the pump price of petrol at its retail outlets to ₦1,130 per litre in Lagos and ₦1,165 per litre in Abuja. represents a reduction of ₦100 from the previous ₦1,230 per litre in Lagos and ₦95 from ₦1,260 per litre in Abuja.
Checks showed that the revised price was already reflected at several NNPC retail outlets in Lagos, including stations along Isheri Oshun Road, Apple Junction, and Ago Palace Way.
Similarly, motorists in Abuja observed the new price of ₦1,165 per litre at NNPC filling stations located in Jabi and Wuse.
The development offers slight relief to consumers who have faced repeated petrol price increases in srecent months.
The latest adjustment comes despite many oil marketers yet to reflect the earlier reduction in the gantry price of petrol by the Dangote Petroleum Refinery.
The refinery had recently reduced its gantry price by ₦100 per litre to ₦1,075, following a decline in global crude oil prices.
The earlier spike in crude oil prices was linked to rising geopolitical tensions involving the United States, Iran, and Israel, which raised fears of disruptions to global oil supply.
Particular concerns were centred around the Strait of Hormuz, through which a significant portion of the world’s oil shipments passes.
However, oil prices began to decline after Donald Trump indicated that the conflict could end soon, easing concerns about prolonged supply disruptions.
Market data showed that Brent crude, the global oil benchmark, dropped by about 8.45 per cent, falling from roughly $110 per barrel to around $92 per barrel.
The decline followed discussions among European ministers about the possible release of strategic oil reserves to stabilise global energy markets.
State governments have called for a forensic audit of Nigeria’s crude oil-backed borrowing arrangements, warning that opaque crude-for-loan and swap deals may be undermining inflows into the Federation Account.
The PUNCH earlier reported that the Nigerian National Petroleum Company Limited pledged 272,500 barrels per day of crude oil through a series of crude-for-loan deals totalling $8.86bn, according to an analysis of a report by the Nigeria Extractive Industries Transparency Initiative and the NNPC’s financial statements.
According to The PUNCH’s findings, NNPC has already fully repaid $2.61bn in loans, representing 29.4 per cent of the total credit facility, while $6.25bn or 70.6 per cent, remains outstanding. Also, out of the $8.86bn credit facility, only about $6.97bn has been received from seven crude-for-loan deals, as of December 2023.
However, state governments, through their commissioners of finance, are demanding an audit of these deals.
The demand was contained in a communiqué issued at the end of the 2026 retreat of the Federation Account Allocation Committee Post-Mortem Sub-Committee, obtained by The PUNCH on Thursday, which stated that, “All crude oil-backed borrowing arrangements should be subjected to legislative approval, full disclosure, and independent audit. Existing arrangements should be reviewed, with forensic audits conducted to restore confidence and protect future Federation revenues.”
The communiqué followed a three-day retreat held in Enugu between February 9 and February 11, where fiscal authorities, state representatives, revenue agencies, and policy experts met to examine persistent revenue leakages affecting the Federation Account.
The retreat, which focused on “Assessing Fiscal and Sectoral Policies for Closing Revenue Leakage in the Federation Account,” was organised to critically assess fiscal frameworks and administrative practices affecting federal revenue collections and distribution to the three tiers of government.
According to the communiqué, the meeting was convened by the FAAC Post-Mortem Sub-Committee to “critically assess fiscal and sectoral policies contributing to revenue leakage in the Federation Account and to reposition the Sub-Committee for a more proactive revenue assurance role.”
The retreat was formally opened by the Governor of Enugu State, Dr Peter Mbah, who was represented by the Secretary to the State Government, Prof Chidiebere Onyia. In his goodwill message, Onyia welcomed participants and reaffirmed the importance of fiscal coordination and transparency in managing public finances.
He also emphasised the need for stronger accountability mechanisms in the management of Federation revenues, while commending the FAAC Post-Mortem Sub-Committee and the Revenue Mobilisation Allocation and Fiscal Commission for their efforts to strengthen public finance governance in the country.
The communiqué indicated that the welcome address was delivered by the Chairman of the FAAC Post-Mortem Sub-Committee, Abdulazeez King.
Goodwill messages were also delivered by the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission, Dr Mohammed Shehu, who was represented by Federal Commissioner, Ntufam Whiley.
The former Minister of State for Finance, who is now the Minister of State for Budget, Dr Doris Uzoka-Anite, and the Permanent Secretary of the Federal Ministry of Finance, Mr Raymond Omachi, were represented at the event by Dr Ali Mohammed, Director of Home Finance.
A keynote address on the theme of the retreat was delivered by the Accountant-General of the Federation, Mr Shamseldeen Ogunjimi, who was represented by Mrs Rita Okolie, Director of the Federation Account at the Office of the Accountant-General of the Federation.
Participants at the retreat included representatives of the Federal and State Governments, revenue-generating agencies, oversight institutions, and technical experts.
According to the communiqué, deliberations during the sessions were enriched by presentations covering a broad range of fiscal governance issues, including the Federation Account framework, reforms in the petroleum sector, tax policy changes, audit oversight, crude oil-backed borrowing, and administrative practices affecting government revenue inflows.
Participants at the retreat reaffirmed the constitutional importance of the Federation Account as the central pool through which revenue is shared among the three tiers of government.
The communiqué noted that the account, established under Section 162 of the 1999 Constitution, “remains the backbone of fiscal sustainability for the three tiers of government.”
However, it warned that several structural challenges continue to erode the volume of distributable revenues available to the Federal Government, states, and local governments.
The communiqué stated that participants unanimously observed that “persistent revenue leakages, opaque deductions, institutional inefficiencies, and weak oversight continue to erode distributable revenues.”
The retreat also expressed concern over the increasing scale of quasi-fiscal deductions from Federation revenues. These deductions, according to participants, include power sector subsidy obligations, debt write-offs, and operational expenses deducted at source before revenue is remitted into the Federation Account.
The communiqué stated that these practices were widely viewed as inconsistent with the principles of transparency and fiscal discipline.
It said, “The retreat noted with concern the growing scale of quasi-fiscal deductions from Federation revenues, including power-related subsidy obligations, debt write-offs, and operational costs deducted at source. These practices were considered inconsistent with transparency, budgetary discipline, and constitutional intent.”
Participants also examined the implications of the Petroleum Industry Act and its impact on the management of oil and gas revenues. While acknowledging that the legislation has created opportunities for improved governance in the petroleum sector, the retreat raised concerns about certain operational practices under the new framework.
According to the communiqué, participants noted that issues surrounding the transfer of joint venture assets to NNPC Limited, management fees, production sharing contract profit oil administration, and the Frontier Exploration Fund had raised serious concerns among stakeholders.
“These developments were observed to have materially reduced inflows into the Federation Account and weakened oversight,” the communiqué stated.
The retreat further stressed the importance of transparency, accountability, and stronger oversight mechanisms in the management of public finances. Participants agreed that unrestricted access to Federation Account data by oversight institutions was essential for effective monitoring and recovery of government revenues.
The communiqué stated, “Transparency, accountability, and oversight are indispensable to closing revenue leakages. It was resolved that unrestricted access to Federation Account data by oversight institutions, particularly the Office of the Auditor-General for the Federation, is critical for effective monitoring, audit, and recovery of revenues.”
Participants also highlighted the role of the Supreme Audit Institution in preventing and detecting revenue leakages. The retreat emphasised the need to strengthen audit capacity and improve the timeliness of audit reporting to ensure that audit findings lead to concrete revenue recovery and deterrence against financial misconduct.
According to the communiqué, “Participants underscored the constitutional role of the Supreme Audit Institution in preventing and detecting revenue leakages. The retreat called for strengthened audit capacity, timely audit reporting, and enforceable follow-up mechanisms to ensure that audit findings translate into actual revenue recovery and deterrence.”
The meeting also raised concerns about the high cost of revenue collection by some government agencies. Participants described these costs as a major drain on the Federation Account and called for reforms to align collection charges with global best practices.
“The high cost of revenue collection by certain agencies was identified as a major drain on the Federation Account,” the communiqué said.
It added that participants resolved that cost-of-collection arrangements should be periodically reviewed and benchmarked against international standards. The retreat also welcomed ongoing tax reforms aimed at expanding the tax base and improving compliance across the country.
Participants noted that the reforms could significantly boost government revenue if implemented effectively. The communiqué stated that tax reforms should focus on strengthening compliance mechanisms and reducing fragmentation within the tax system.
Another major area of concern discussed at the retreat was the growing reliance on crude oil-backed borrowing and crude-for-product swap arrangements. The communiqué specifically mentioned arrangements such as Project Gazelle and the Direct Sale Direct Purchase scheme.
The retreat noted that such arrangements could reduce transparency in revenue flows and weaken accountability in the management of oil revenues. It was, therefore, recommended that any future crude-backed financing arrangements must receive legislative approval and be subject to full disclosure and independent audits.
Participants also called for stronger collaboration between RMAFC and NNPC Limited to ensure proper accounting for oil revenues. The communiqué recommended that RMAFC should intensify engagement with the national oil company to obtain complete documentation relating to joint venture asset transfers and to compute net revenues due to the Federation.
It said the commission should also pursue appropriate recovery actions where discrepancies are identified.
The PUNCH earlier reported that about 14.66 per cent of Nigeria’s crude oil production in 2025 was likely committed to servicing crude-backed loan facilities, based on estimates derived from disclosures in the Nigerian National Petroleum Company Limited’s 2024 financial statements and official production data.
An analysis by The PUNCH shows that four major crude-secured arrangements — Project Gazelle, Project Yield, Project Leopard, and Eagle Export Funding — are backed by a combined 213,000 barrels of crude oil per day.
If this allocation remained unchanged throughout 2025, the total volume committed to debt servicing would amount to 77.75 million barrels for the year, calculated by multiplying 213,000 barrels per day by 365 days.
Data from the Nigerian Upstream Petroleum Regulatory Commission indicate that Nigeria produced 530.41 million barrels of crude oil between January and December 2025.
The 77.75 million barrels tied to crude-for-loan arrangements therefore represent 14.66 per cent of total annual production. Using the 2025 average Bonny Light price of $72.08 per barrel, the 77.75 million barrels translate to about $5.60bn.
Converted at the official exchange rate of N1,492 to the dollar, the crude potentially deployed to service the loans is valued at approximately N8.36tn. This implies that out of the estimated gross crude oil earnings for 2025, a sizeable portion of output by volume was effectively earmarked for debt servicing before revenues could fully accrue to government coffers.
The obligations span multiple forward-sale and project-financing arrangements expected to be serviced through substantial crude oil and gas deliveries. These commitments have become a central pillar of NNPC’s funding framework following years of fiscal strain, volatile production, and declining upstream investment.
Several of the facilities were used to refinance legacy debts, fund refinery rehabilitation, support cash flow, and meet government revenue obligations.
The Chief Executive Officer of AHA Strategies, Mr Ademola Adigun, earlier linked declining oil earnings to opaque crude-for-cash arrangements and undisclosed loan repayments that have tied up part of the country’s output.
“Some of our crude is already tied up in loan agreements. The problem is that Nigeria doesn’t know the full details of these transactions because there’s little transparency around them,” Adigun said.
He added that several crude-backed projects, including Project Gazelle, were executed without adequate public disclosure or parliamentary scrutiny, urging the Nigeria Extractive Industries Transparency Initiative to strengthen its audits.
Development economist and Chief Executive Officer of CSA Advisory, Dr Aliyu Ilias, said Nigeria’s crude trading structure had grown increasingly complex, involving swaps and oil-to-naira transactions that might not be fully captured in official records.
The Director of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, recalled that during the tenure of former Central Bank Governor, Godwin Emefiele, several forward-sale deals were signed to raise emergency funds amid fiscal pressure.
“During the Emefiele years, Nigeria committed a lot of its crude upfront,” he said. “Those forward sales are still eating into our current earnings.”
Yusuf, however, noted that transparency and professionalism within the NNPCL had improved under the current administration of Bayo Ojulari. “Under the new management of the NNPC, there’s better professionalism and openness,” he said.
He added that full disclosure of crude swap and forward-sale agreements is necessary to restore confidence in oil revenue reporting.
The Chief Corporate Communications Officer of NNPC Limited, Andy Odeh, had not responded to enquiries sent to him regarding the crude-for-loan arrangements as of the time this report was filed.
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