The World Bank has raised concerns over fiscal transparency in Nigeria, revealing that the Nigerian National Petroleum Company Limited (NNPCL) remitted only 50 per cent of the revenue gains from the removal of the petrol subsidy to the Federation Account in 2024.
This disclosure was made in the World Bank’s latest Nigeria Development Update report, titled “Building Momentum for Inclusive Growth,” which examined the country’s fiscal position following the deregulation of the downstream petroleum sector.
According to the report, while NNPCL generated ₦1.1 trillion from crude oil sales and related income in 2024, only ₦600 billion was transferred to the Federation Account. The remaining ₦500 billion was reportedly used to service the company’s legacy debt arrears.
Despite the full removal of the petrol subsidy in October 2024, the World Bank noted that NNPCL delayed revenue remittances until January 2025, and even then, began transferring only half of the proceeds.
“The fiscal outlook remains cautiously optimistic but hinges on the necessary consolidation of recent advances,” the report stated.
“It is essential to ensure that the full revenue gains from the removal of the PMS subsidy estimated at 2.6 per cent of GDP in 2024 are transferred to the Federation.”
Petrol Deregulation: A Delayed Windfall
In mid-2023, President Bola Tinubu won international praise for announcing the removal of Nigeria’s long-standing and costly fuel subsidy, which saw petrol prices triple virtually overnight. The move was expected to free up massive fiscal resources for infrastructure and social spending.
However, widespread public backlash and inflationary pressures forced the government to quietly reintroduce a partial subsidy, maintaining an implicit pricing support regime until September 2024. Deregulation was only fully implemented following the commissioning of the Dangote Refinery.
Revenue Surge vs NNPCL Shortfall
While Nigeria’s overall revenue intake improved in 2024, thanks to reforms in the foreign exchange market and higher returns from oil-related taxes and royalties, NNPCL was singled out as the primary underperformer.
“Gross revenues collected by Nigeria’s main revenue agencies surged in 2024 from ₦16.5 trillion (7% of GDP) in 2023 to ₦29.5 trillion (10.6% of GDP),” the report said.
“However, NNPCL’s remittances declined to ₦600 billion, down from ₦1.1 trillion the previous year, due largely to subsidy-related deductions.”
As of February 2025, the World Bank noted that NNPCL’s claimed arrears stood at ₦7.8 trillion, while the Federation’s claims totaled ₦6.1 trillion leaving net arrears of ₦1.7 trillion owed to the national oil company.
World Bank Urges Financial Reforms
To strengthen fiscal discipline and ensure the success of subsidy reforms, the World Bank called for a forensic audit of NNPCL’s finances and recommended the adoption of standardised reporting templates to the Federation Account Allocation Committee (FAAC).
“Revenues are still low, constraining development spending. It is critical that the full benefits of subsidy reform are channeled transparently to the Federation,” the Bank stated.
The report emphasized that unless full subsidy savings are remitted, Nigeria’s fiscal consolidation efforts could be derailed, potentially limiting investment in infrastructure, education, and healthcare.
“Resolving outstanding arrears and improving the transparency of oil revenue accounting are necessary steps to maintain macroeconomic stability,” the World Bank concluded.
