The Nigerian National Petroleum Company Limited (NNPC) has accumulated N8.5 trillion in related-party balances with its refining subsidiaries as of December 2024, underscoring the deepening financial strain caused by Nigeria’s long-idle state-owned refineries.
The figures, disclosed in NNPC’s latest financial statements, highlight how years of failed rehabilitation projects and non-performing assets have fuelled a growing web of intra-group liabilities that continue to weigh heavily on the national oil company’s balance sheet.
Port Harcourt, Kaduna, NNPC E&P Lead Rising Debt Burden
BusinessDay’s analysis shows that the largest obligations stem from three key entities:
Port Harcourt Refining Company Limited, owing N4.2 trillion;
NNPC E&P Limited, with N4 trillion in related-party liabilities; and
Kaduna Refining and Petrochemical Company Limited (KRPC), with N2.4 trillion in outstanding obligations.
The combined debt marks a sharp rise from N6.3 trillion recorded in December 2023 — a 35 percent year-on-year surge.
The disclosures come at a time when Nigeria, despite being Africa’s largest crude oil producer, continues to rely almost entirely on refined petrol imports and output from the privately owned Dangote Refinery. This is despite NNPC holding four refineries with a combined installed capacity of 445,000 barrels per day.
Financial Positions Across Subsidiaries Deteriorate
Beyond the major refining entities, NNPC’s financial statements show widespread weakening in the corporation’s network of subsidiaries.
NNPC E&P Limited, for instance, saw amounts owed to it by related parties fall from N1.98 trillion in 2023 to zero in 2024, even as its debt to related parties increased to N4.02 trillion. KRPC also recorded significant shifts, with amounts owed by related parties rising from N1.36 trillion to N2.39 trillion — a 76 percent increase — while its own related-party liabilities dropped from N27.2 billion to zero.
Smaller entities such as NNPC Gas Infrastructure Company also contributed to the swelling intra-group transactions, recording N848 million owed by related parties and N107 million owed to related entities in 2024.
“These numbers underscore the fiscal haemorrhaging that has characterised Nigeria’s refining sector for over a decade,” a senior oil executive told BusinessDay. “You’re looking at non-performing assets piling up obligations that ultimately burden the federation.”
Chronic Dysfunction, Endless Delays
The Port Harcourt refinery, responsible for the single largest intra-group balance, has been under rehabilitation for years. NNPC awarded a $1.5 billion contract for its overhaul in 2021, initially promising completion in 2023. That deadline has been repeatedly shifted, with officials now targeting mid-2025.
Nigeria’s refineries in Port Harcourt, Warri and Kaduna have operated at little to no capacity for years, forcing the country to spend an estimated $17 billion on petroleum imports in 2023 alone. The dependence on imports has strained FX reserves and worsened naira volatility, particularly since the removal of fuel subsidies in May 2023 — a move that tripled pump prices.
The contrast with the Dangote Refinery has been stark. The 650,000-barrel-per-day facility in Lagos achieved commercial production of diesel, aviation fuel and petrol within its projected timeline, exposing the persistent inefficiencies of NNPC’s state-owned plants.
Reform, Privatisation Back on the Table
With rehabilitation efforts repeatedly faltering, President Bola Tinubu’s administration has revived the possibility of privatising state-owned refineries. The proposal has, however, faced pushback from labour unions and groups who view the facilities as strategic national assets.
Olu Verheijen, Special Adviser to the President on Energy, said on 4 November that refinery privatisation is “one of several options” the government is reviewing as part of broader reforms to stabilise the energy sector.
“You have to consider it if you find the right technical partner with sufficient capital,” she said. “The plants have largely been sustained by subsidies, but now that the distortions are gone, commercial principles must guide operations.”
Analysts warn that the growing related-party balances reflect a “circular debt crisis” within NNPC’s structure — one that masks the true performance of subsidiaries while draining financial resources through repeated bailouts.
Without operational refineries generating meaningful revenue, experts say the N8.5 trillion intra-group burden will continue to expand, deepening Nigeria’s dependence on imports and delaying long-promised reforms in the nation’s downstream sector.
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