NNPCL fuel subsidy gains not fully remitted – World Bank
The World Bank has expressed concern about Nigeria's fiscal transparency, revealing that the Nigerian National Petroleum Company Limited returned only half of the revenue gains from the removal of the petrol subsidy in 2024.In its latest Nigeria Development Update, titled "Building Momentum for Inclusive Growth," the World Bank revealed that only N600 billion of NNPCL's N1.1 trillion in crude oil sales and related income in 2024 was transferred to the Federation Account. According to the report, the state-owned oil company used the remaining N500 billion to pay off historical debts.
"Despite the subsidy being fully removed in October 2024, NNPCL did not begin transferring the resulting gains to the Federation Account until January 2025. Since then, it has only remitted 50% of these funds, according to the report.
The fuel subsidy, long regarded as a drain on public finances, was officially eliminated in October 2024, following delays caused by public outrage and the Dangote Refinery's phased operational rollout. The removal, first announced by President Bola Tinubu in mid-2023, was hailed as a bold economic reform that was expected to save Nigeria billions of dollars each year.
However, the World Bank noted that NNPCL's delayed and partial remittances may undermine the anticipated fiscal benefits. It warned that the Federal Government's 2025 revenue projections—of which 70% are expected to come from oil-related sources—are heavily reliant on the full remittance of savings.
"Ensuring the complete transfer of subsidy savings, estimated at 2.6 per cent of GDP in 2024, is essential to stabilise the country's fiscal outlook," claimed the report.
According to the figures, while gross revenues collected by key revenue agencies such as the Federal Inland Revenue Service, Nigeria Customs Service, and Nigerian Upstream Petroleum Regulatory Commission increased from N16.5 trillion in 2023 to N29.5 trillion in 2024, NNPCL's remittances fell from N1.1 trillion to N600 billion during the same period. This, according to the report, was due to the continuation of a "implicit PMS subsidy" until September 2024.
The World Bank also detailed the ongoing financial claims between the Federal Government and NNPCL. As of February 2025, NNPCL's claimed arrears totalled N7.8 trillion, while the government's counterclaims were worth N6.1 trillion, leaving a net balance of N1.7 trillion in NNPCL's favour.
To address the remittance shortfall and improve transparency, the World Bank recommended conducting a forensic audit of NNPCL's financial practices, implementing uniform reporting formats for the Federation Account Allocation Committee, and improving public finance management systems.
"Resolving outstanding arrears and ensuring that all revenue gains from subsidy reform are channelled to the Federation is critical to Nigeria's fiscal consolidation," the study warned. "Failure to do so could constrain the government's ability to invest in infrastructure and social services."
The Bank concluded by urging Nigeria to increase transparency in oil revenue accounting and prioritise the efficient use of fiscal resources in order to achieve inclusive growth.
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