The Nigerian National Petroleum Company Limited (NNPCL) has disclosed that the Federation owes it a staggering N17.5 trillion for pipeline protection, fuel under-recovery, and other energy-security operations carried out in the 2024 financial year.
The revelation—contained in the company’s 2024 consolidated financial statements—has triggered renewed calls from analysts for a full forensic audit, amid concerns over rising security costs, persistent crude theft, declining production, and opacity around the national oil company’s operations.
A breakdown of the figures shows that N7.13 trillion was incurred as energy-security costs aimed at maintaining stable petrol prices whenever fluctuations in exchange rates widened the gap between the landing cost of imported PMS and the government-regulated pump price.
The document further reveals that N8.67 trillion was expended under fuel under-recovery—highlighting the financial strain of sustaining regulated petrol pricing despite President Bola Tinubu’s May 29, 2023 declaration that “fuel subsidy is gone.”
Under Section 64(m) of the Petroleum Industry Act (PIA) 2021, NNPCL is designated the “supplier of last resort,” with the Act mandating that all energy-security costs be borne by the Federation. However, the financial statements indicate no clear timeline for reimbursement by the Federal Government.
A significant portion of the N17.5 trillion outlay covered pipeline surveillance, repairs, crude-theft prevention, and broader security operations aimed at safeguarding Nigeria’s oil and gas infrastructure.
The report also shows N8.84 trillion booked as “Other Receivables from the Federation,” representing security-related expenses and advances made on behalf of the Federal Government.
“These payments were made under an approval framework between the government and NNPC, allowing the company to shoulder costs upfront and recover them later,” the document stated.
The debt to the NNPCL nearly doubled the N9.36 trillion recorded in 2023, underscoring growing pressure on the company’s balance sheet.
This comes despite NNPCL announcing a Profit After Tax of N5.4 trillion for 2024—a 64 per cent increase from the N3.29 trillion recorded in 2023—driven by higher crude production, cost-control measures, and improved operational efficiency.
Total revenue rose sharply by 87.9 per cent, from N23.99 trillion in 2023 to N45.08 trillion in 2024, according to analysis by financial research platform Proshare.
Crude oil sales more than doubled to N29.21 trillion, while revenues from natural gas and power increased by 125.7 per cent. Power revenues alone surged from N94 million in 2023 to N9.42 billion in 2024.
However, Proshare cautioned that rising finance costs, expanding receivables, and a weakening gross margin signal the need for prudent cash-flow management.
Analysts Demand Forensic Audit
The N17.5 trillion security-related expenditure has drawn sharp criticism from energy economists and public finance experts who argue that the costs are inconsistent with Nigeria’s production realities.
Jeremiah Olatide, CEO of Petroleumprice.ng, described the expenditure as “outrageous,” adding that it reinforces concerns about internal collusion and systemic inefficiencies.
“This scale of spending is indefensible when production remains at 1.4 to 1.5 million barrels per day—far below potential,” he said. “A thorough, transparent, and independent audit must be carried out.”
He added that persistent losses from vandalism and theft suggest deep-rooted leakages within the system.
In a separate reaction, public finance analyst and Dairy Hills co-founder, Kelvin Emmanuel, said the disclosures validate long-standing allegations that crude oil is routinely allocated to armed groups under pipeline protection arrangements.
“For months, I have been saying the government is giving crude oil daily to militants for pipeline protection,” he wrote on X. “Now that NNPC’s financial statement shows that N7.1 trillion was disbursed in 2024 for pipeline security contracts, I am sure the 78,000 to 110,000 barrels per day is now confirmed.”
Calls for Transparency Intensify
Analysts argue that as NNPCL transitions under the PIA into a more commercially driven entity, transparency around security-related spending has become a national imperative.
They insist that open contracting, independent verification, and an overhaul of Nigeria’s opaque pipeline protection system are urgently needed.
With mounting debts, rising costs, and uncertainty over government reimbursements, experts warn that failure to reform could deepen financial strains on the national oil company—and ultimately on the Nigerian public.
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