NNPC’s N17.5tn pipeline security, fuel subsidy bill

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THE astonishing revelation that the Nigerian National Petroleum Company Limited spent N17.5 trillion in a single financial year on fuel subsidies and pipeline security once again raises questions about the government’s declared abolition of fuel subsidies and the opaque financial management within Nigeria’s oil sector.

This massive expenditure not only outpaced Nigeria’s annual fuel subsidy records of past years but also surfaced amid sharply higher petrol prices for ordinary Nigerians. This contradiction demands urgent scrutiny and accountability.

Central to this anomaly is NNPC’s 2024 financial statement, which shows an unprecedented N17.5 trillion spent ostensibly on securing oil pipelines and energy security operations.

This outlay encompasses N7.13 trillion classified as energy-security costs aimed at stabilising petrol prices, plus N8.67 trillion related to “under-recovery” on refined petroleum products, which refers to the price gap between the regulated pump price and the higher actual import cost absorbed by NNPC.

Another N8.84 trillion is recorded as receivables for advances and security costs incurred, reinforcing the sheer scale of the company’s financial exposure.

Despite this massive operational cost, no clear government reimbursement plan has been outlined, placing tremendous strain on NNPC’s cash flow and raising concerns about long-term fiscal sustainability.

Indeed, the figures rubbish the NNPC’s N5.4 trillion profit declared for 2024, a 64 per cent rise over the N3.29 trillion posted in 2023.

This financial opacity that has defined NNPC’s operations for decades echoes concerns raised by analysts about endemic corruption, operational inefficiencies, and systemic leakages.

Industry watchers and experts have slammed this expenditure as outrageous, urging the government to commission a comprehensive forensic audit.

Given that Nigeria’s crude daily production is hovering at roughly 1.4 to 1.5 million barrels, well below its potential of at least 2.2mbpd recorded during the COVID pandemic, the justification for such exorbitant pipeline security and subsidy-related costs strains credulity.

It is bewildering how the NNPC managed to incur such a huge fuel subsidy cost when pump prices averaged N1,189/litre in December 2024, up 77 per cent from N761/litre a year earlier, while petrol landing cost was approximately N970 per litre for the same period, per the Major Energies Marketers Association of Nigeria.

Even the fact that the naira closed at N1,535/dollar on December 31, 2024, after fluctuating widely for most of the year and suffering a 40.9 per cent depreciation overall, cannot explain these figures.

Finance Minister, Wale Edun’s Accelerated Stabilisation and Advancement Plan, presented in June 2024, projected fuel subsidy to gulp about N5.4 trillion in 2024 as against the N3.6 trillion budgeted for the same intervention in 2023. The NNPC’s figures show that the projections were overshot significantly.

The Petroleum Industry Act 2021 partially explains the government’s role in this quagmire.

By designating NNPC as “supplier of last resort” under Section 64(m), the Act mandates the company to absorb subsidy costs temporarily when the regulated pump price is lower than NNPC’s actual landing cost for imported fuel, with the Federation expected to reimburse these under-recoveries later.

This defeats the purpose of the oil sector liberalisation, as price regulation and fuel subsidy remain in place despite record petrol prices.

It raises questions about the impact of the entry of Dangote Petroleum Refinery on the market since January 2024, given its persistent problems with local crude supply and other operational bottlenecks.

Nigeria still imported petrol worth N12.8 trillion in the 15 months between August 2024 and October 2025, per the Nigerian Midstream and Downstream Petroleum Regulatory Authority data.

Compounding the issue is the staggering rise in pipeline protection costs.

Allegations abound that pipeline security contracts are awarded opaquely to politically connected cronies, enabling systemic corruption and even tacit collusion with militant groups controlling “pipeline protection” zones through crude allocations rather than cash.

The Muhammadu Buhari administration awarded a N4 billion per month pipeline security contract starting August 2022 to Tanita Security Services controlled by ex-Niger Delta militant, Government Ekpemupolo, aka Tompolo.

Therefore, open contracting, detailed contract disclosures, independent third-party audits, and parliamentary oversight are indispensable to reclaiming accountability and restoring public confidence.

The NNPC’s notable increase in total revenue and profit after tax in 2024, including gains from crude sales, refined petroleum products, gas, and power, indicates improved operational efficiency at some levels.

However, rising finance costs and liability ratios erode sustainability and point to recklessness in managing public funds.

Addressing these issues demands political will for openness, tighter controls, and reforms that align Nigeria’s oil wealth with national development, rather than allowing it to be cornered by vested interests.

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