Nearly one in every seven barrels of crude oil Nigeria produced last year never reached the Federation Account. It went instead to repay loans — loans that many state governments say were taken without their knowledge, without parliamentary approval, and without anything close to adequate public disclosure.
That finding sits at the heart of a growing confrontation between Nigeria’s 36 states and the Nigerian National Petroleum Company Limited over what critics describe as a shadow financing system built on pledged crude oil — and shielded from scrutiny.
State finance commissioners are now demanding a forensic audit of all crude-backed borrowing arrangements, warning that the deals are quietly hollowing out the revenue pool from which federal, state and local governments are paid each month.
The scale of what has been pledged
NNPCL has committed 272,500 barrels of crude oil per day as collateral across a series of loans totalling $8.86 billion. Of that, $6.25 billion remains unpaid.
Four arrangements — Project Gazelle, Project Yield, Project Leopard and Eagle Export Funding — account for 213,000 barrels per day between them. Run those numbers across a full year, and roughly 77.75 million barrels were effectively pre-sold to service debt in 2025. At that year’s average Bonny Light price of $72.08 a barrel, the value of those barrels comes to approximately $5.6 billion — or ₦8.36 trillion.
Nigeria produced 530 million barrels of crude oil in 2025. However, the debt-servicing commitments swallowed 14.66 per cent of it before any revenue was shared.
A system designed in the dark
The disclosures emerged from a three-day retreat held in Enugu in February, organised by the Federation Account Allocation Committee’s Post-Mortem Sub-Committee. The gathering brought together finance commissioners, revenue agencies and policy experts to examine what they described as persistent and worsening leakages in public revenue.
Participants said crude-backed deals had been executed “without adequate public disclosure or parliamentary scrutiny”. They also called on the government to ensure that any future arrangements receive legislative approval and a full independent audit before a single barrel is pledged.
The problem, as they see it, goes beyond the loans themselves. Quasi-fiscal deductions — covering power sector subsidies, debt write-offs and NNPCL’s own operational costs — are being taken out of Federation revenues at source, before distribution to the three tiers of government. Participants described these practices as “inconsistent with transparency, budgetary discipline, and constitutional intent.”
What the states want
Beyond the audit demand, the communiqué called for unrestricted oversight body access to Federation Account data, stronger audit institutions with enforceable follow-up powers, and direct engagement between the Revenue Mobilisation Allocation and Fiscal Commission and NNPCL to recover any revenues found to have been misaccounted.
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