The Federal Government’s decision to cancel roughly $5bn in debts owed by the Nigerian National Petroleum Company Limited forms part of efforts to prepare the state-owned oil firm for a possible initial public offering in 2028, according to a new industry report.
Industry sources said the government is restructuring NNPC’s finances to strengthen its balance sheet ahead of a public listing, in line with wider reforms intended to attract foreign capital and improve transparency in the oil and gas industry.
On Monday, the Presidency confirmed that President Bola Tinubu approved the cancellation of NNPC’s foreign currency obligations totalling $1.42bn, as well as domestic liabilities amounting to N5.57tn. At prevailing exchange rates, the cleared obligations are estimated at about $5bn.
The government explained that the liabilities arose from production sharing contracts where NNPC operates as concessionaire for the federation, domestic crude supply commitments, repayment agreements, modified carry arrangements and outstanding royalties.
However, officials did not specify which portions of the debts were denominated in dollars and which were in naira.
The report read, “The government is readying NNPC for a 2028 initial public offering. These debts were linked to production sharing contracts in which NNPC represents the government as concessionaire, domestic supply obligations, repayment agreements, modified carry arrangements, and royalties. It did not say which were dollar-denominated and which were in naira.”
NNPC had previously announced plans to list part of the company on the stock exchange, marking a significant transition following its commercialisation under the Petroleum Industry Act.
Early in 2025, the company disclosed that it had started appointing IPO advisers, an issuing house and investor relations consultants, with Lagos, London and New York identified as possible listing locations. The proposed transaction could involve selling up to 20 per cent of the company’s shares.
As a result, eliminating long-standing liabilities is seen as essential for a successful listing, since investors would demand transparency around the company’s financial health. Nevertheless, despite the recent debt relief, notable financial questions remain unresolved.
The report noted that the debt cancellation does not cover an estimated $42.4bn linked to the 2011–2017 period, which the government says is still under dispute.
NNPC has consistently argued that it fully remitted all revenues due to the federation during that timeframe and owes nothing. Liabilities accumulated between January and October 2025 have also not been written off.
Clearing legacy debt off NNPC’s books in preparation for an IPO does not yet extend to $42.4bn from 2011-17, which the government said remains disputed and unresolved. NNPC says it remitted all revenue due and owes nothing to the government for that period. NNPC’s debts to the government for January-October 2025 also “remain outstanding and are actively being tracked and recovered,” with today’s write-offs extending only to the period ending December 2024, the government said.
Meanwhile, several industry sources disclosed that NNPC is negotiating new funding arrangements, including a proposed $5bn crude-backed forward-sale loan involving Saudi Arabia’s state oil company, Aramco.
Under the proposed deal, a special purpose vehicle established by NNPC, known as Green Falcon, would obtain the loan and use the proceeds to purchase crude oil from NNPC at discounted rates under a forward-sale structure.
According to the sources, Green Falcon would repay Aramco and meet related costs using proceeds from reselling the crude. Part of the financing is also expected to be applied toward settling obligations linked to an earlier crude-backed funding arrangement known as Project Gazelle.
“NNPC is in the process of taking on sizable new debt, with talks ongoing for a $5bn crude-backed, forward sale loan from Saudi state-controlled Aramco. A special purpose vehicle created by NNPC, called Green Falcon, will take the Aramco loan to buy discounted crude barrels from NNPC under a forward sale agreement, the NNPC source said. Green Falcon will repay Aramco and cover other costs from its resale of the crude.
“Part of the Aramco loan will go towards paying down debt obligations arising from an earlier crude-backed, forward sale SPV called Gazelle, another source said. NNPC borrowed from oil traders using Gazelle under an ‘accordion’ arrangement, which was designed to take on more than $3.3bn in debt and ended up raising $3.2bn,” the report added.
Under the Gazelle arrangement, NNPC secured funding from oil traders through an “accordion” facility originally structured to exceed $3.3bn, but which eventually raised about $3.2bn. At the time, the company said the funds would be used to cover operating costs and to pay royalties and dividends to the government in advance.
Overall, the mix of debt forgiveness and new borrowing underscores the tightrope the government faces as it seeks to stabilise NNPC’s finances, maintain operations and position the company for a historic public listing.
