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Nigeria’s state governments have demanded forensic audits of all crude oil-backed borrowing arrangements entered into by the Nigerian National Petroleum Company Limited, warning that seven opaque crude-for-loan deals totalling $8.86 billion may be systematically suppressing inflows to the Federation Account that funds allocations to all three tiers of government, while a separate and unresolved dispute over $42.3 billion in alleged NNPC under-remittances has stalled the broader revenue reconciliation process entirely.
The demand, the most formal collective challenge from subnational governments to NNPC’s financing arrangements since the crude-for-loan model was established, was contained in a communiqué issued at the conclusion of the 2026 retreat of the Federation Account Allocation Committee Post-Mortem Sub-Committee, a document obtained by The PUNCH from the February 2026 FAAC plenary package. The retreat was held in Enugu State between February 9 and 11, convening state finance commissioners, federal fiscal authorities, revenue-generating agencies, and independent policy experts under the theme “Assessing Fiscal and Sectoral Policies for Closing Revenue Leakage in the Federation Account.”
The communiqué’s language on crude-backed loans was unambiguous.
“All crude oil-backed borrowing arrangements should be subjected to legislative approval, full disclosure, and independent audit. Existing arrangements should be reviewed, with forensic audits conducted to restore confidence and protect future Federation revenues,” it stated. Participants further recommended that the Revenue Mobilisation Allocation and Fiscal Commission intensify direct engagement with NNPC Limited to obtain complete documentation of joint venture asset transfers and compute the net revenues owed to the federation, pursuing recovery actions wherever discrepancies are identified.
The PUNCH’s analysis of the NNPC’s own financial statements and the Nigeria Extractive Industries Transparency Initiative’s reporting revealed that NNPC pledged 272,500 barrels per day of crude oil through a series of seven crude-for-loan deals with a combined credit facility of $8.86 billion. Of that total, approximately $6.97 billion had been received by NNPC as of December 2023. The company has repaid $2.61 billion — 29.4 percent of the total facility — leaving $6.25 billion outstanding.
The four largest facilities are known by internal project names. Project Gazelle, Project Yield, Project Leopard, and Eagle Export Funding are collectively backed by a combined 213,000 barrels of crude oil per day. These commitments were used to refinance legacy debts, fund refinery rehabilitation, provide government cash flow, and service fiscal obligations during periods of constrained upstream production. Since 2023, approximately two trillion naira in revenues intended for the Federation Account has instead been directed toward management fees, frontier exploration allocations, and other categories of deduction that the Petroleum Industry Act of 2021 created as legitimate off-takes, but which critics argue now operate without adequate legislative oversight or expenditure controls.
The Chief Executive of AHA Strategies, Ademola Adigun, summarised the structural problem facing both auditors and states.
“Some of our crude is already tied up in loan agreements. The problem is that Nigeria doesn’t know the full details of these transactions because there’s little transparency around them,” he said. Several of the crude-backed projects, he added, were executed without adequate public disclosure or parliamentary scrutiny during the Emefiele tenure at the Central Bank of Nigeria, and their forward-sale obligations continue to reduce current earnings.
The state governments’ demand for forensic audits arrives against a backdrop of parallel actions already initiated at the federal level. Finance Minister Wale Edun confirmed in late February that a forensic audit of NNPC, mandated by the full FAAC, was already under way.
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“It is an ongoing forensic audit of NNPC as mandated by the Federation Account Allocation Committee meeting. That is ongoing,” Edun said. He said the review was examining deductions and charges that reduce what eventually accrues to the Federal Government, states, and local governments, and was running concurrently with a new presidential executive order directing that management fees, frontier exploration funds, and gas flare penalties be paid directly into the Federation Account.
The federal-level audit has already surfaced a fundamental disagreement between NNPC and the consultants engaged to scrutinise its accounts, with the two parties unable to agree on whether $42.3 billion in alleged oil remittances are owed to the federation. The FAAC Post-Mortem Sub-Committee report described the impasse as a “major roadblock” and directed both sides to continue reconciliation discussions before the next FAAC plenary. Until that exercise is concluded, the precise volume of oil revenue owed to the Federation Account cannot be formally established.
The Senate’s Public Accounts Committee separately announced it was initiating an inquiry into approximately N210 trillion in NNPC accounts, with former Group Managing Director Mele Kyari and former Chief Financial Officer Umar Ajiya summoned to testify after the Eid holiday break.
The FAAC communiqué identified a broader spectrum of revenue erosion beyond the crude-for-loan issue. Participants raised particular concern about the proposed deduction of N3.6 trillion from the Federation Account across 2026, 2027, and 2028 to fund electricity subsidies — a proposal embedded in the Medium-Term Expenditure Framework that would in effect shift the power sector’s financial burden directly onto the constitutionally protected pool of shared federal revenue. States at the Enugu retreat unanimously objected, describing the deductions as “inconsistent with transparency, budgetary discipline, and constitutional intent.”
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The sub-committee further identified Production Sharing Contract profit oil administration, cost-of-collection charges by revenue agencies that appear to exceed permissible caps under the Fiscal Responsibility Act, and the management of the Frontier Exploration Fund as categories requiring urgent clarification and reform.
The retreat was opened by a representative of Enugu State Governor Peter Mbah, who reaffirmed the importance of fiscal transparency and coordination among the three tiers of government. The communiqué was chaired by FAAC Post-Mortem Sub-Committee head Abdulazeez King, with goodwill messages from the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission Dr Mohammed Shehu and representatives of the Ministry of Finance and the Office of the Accountant-General of the Federation.
Neither NNPC Limited’s Corporate Communications Office nor the office of Group Chief Executive Bayo Ojulari responded to enquiries.
