Energy analysts and public finance experts have called for a comprehensive forensic audit after the Nigerian National Petroleum Company Limited (NNPC Ltd) disclosed that it spent N17.5 trillion on pipeline protection, under-recovery and other energy-security operations in the 2024 financial year.
The figure—almost double the N9.36tn recorded in 2023—has raised fresh questions around transparency, accountability, and the true financial burden of maintaining regulated petrol prices in Nigeria.
Federation owes NNPC N17.5tn for security operations
According to NNPC’s 2024 consolidated financial statements, the Federation currently owes the national oil company N17.5tn, representing the cumulative cost of protecting pipelines, conducting security operations, covering under-recovery on imported fuel, and providing other energy-security interventions on behalf of the government.
A breakdown of the spending shows:
N7.13tn was recorded as energy-security costs, mainly to stabilise the pump price of petrol when the landing cost rose above the regulated selling price.
N8.67tn went directly into under-recovery on refined products.
N8.84tn was booked under Other Receivables from the Federation, covering advances to the Federal Government and additional security expenses.
The financials, analysed on Thursday, reinforce the scale of NNPC’s role as the country’s “supplier of last resort”—a function backed by Section 64(m) of the Petroleum Industry Act (PIA) 2021, which mandates the Federation to reimburse all such costs.
Costs surge amid improved profit performance
NNPC had on Monday announced a Profit After Tax of N5.4tn for 2024, a 64 per cent rise from N3.297tn in 2023. The Group Chief Executive Officer, Bayo Ojulari, attributed the performance to higher crude output, reduced losses, and stronger operational efficiency.
However, analysts warn that the company’s rising receivables and debt exposure pose significant liquidity risks.
Energy-security costs alone grew from N4.843tn in 2023 to N7.13tn in 2024, an increase of nearly 47 per cent. By year-end, the total amount owed to NNPC for under-recovery and energy-security operations stood at N8.67tn, up from N6.25tn in 2023.
The surge, experts say, directly contradicts President Bola Tinubu’s May 2023 declaration that “fuel subsidy is gone”, suggesting that subsidy-related spending continues under a different framework.
Analysts alarmed: ‘The figures make no sense’
Energy economist and CEO of Petroleumprice.ng, Jeremiah Olatide, according to Punch, described the expenditure as “indefensible”, insisting that it reinforces long-standing fears of internal leakages within the national oil company.
“N17.5tn on pipeline protection and energy security in 12 months is outrageous and must be independently audited,” he said. “How can production still be stuck at 1.4–1.5 million barrels per day while we spend this much on securing pipelines?”
Olatide argued that low production, persistent theft, and repeated pipeline shutdowns contradict the scale of the spending and point to systemic collusion.
‘Militants receiving crude as payment’ — Emmanuel
Public finance analyst and Dairy Hills co-founder, Kelvin Emmanuel, said the disclosures confirm allegations that crude oil is being allocated to armed groups under the guise of pipeline surveillance contracts.
Writing on X, he said: “For months I’ve said the government is giving crude daily to militants for pipeline protection. Now that NNPC’s statement shows N7.1tn came from subsidy savings for these contracts, the estimate of 78,000 to 110,000 barrels per day makes sense.”
Emmanuel called for third-party verification of all security-related payments and urged the government to dismantle what he described as an “opaque and outdated protection architecture”.
Proshare flags rising risks despite strong revenue
In its review of the 2024 statements, Proshare praised NNPC’s improved top-line performance—total revenue rose 87.89 per cent to N45.08tn—but warned that the quality of earnings requires closer scrutiny.
The platform noted rising finance costs, increased inventories, expanding receivables, and a growing debt-to-equity ratio, urging stronger working-capital discipline.
Growing pressure for transparency
Industry stakeholders say the N17.5tn figure highlights the urgent need for a transparent reimbursement framework between the Federal Government and NNPC, warning that ambiguity over repayment timelines could weaken the company’s balance sheet and ultimately impact public finances.
Analysts insist that without independent verification, the country risks normalising multi-trillion-naira spending on pipeline security even as crude output remains below potential and theft continues to undermine national revenues.
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