Nigerian government clears $5bn worth of NNPC debts as it prepares for an IPO in 2028

PLANS to privatise the Nigerian National Petroleum Company (NNPC) through an initial public offering (IPO) have been stepped up by the federal government with the wiping off of about $5bn of its debts ahead of a proposed sale in 2028.

Founded in 1977, the NNPC served as Nigeria's cash-cow for decades, entering into joint ventures with oil companies who operate in the country. With the realisation that there is a need to reduce Nigeria's dependence on crude oil, the activities of the NNPC are being wound down and as part of this process, the corporation is being privatised.

Still a fully state-owned government company, the NNPC was transformed from a corporation into a limited liability company in July 2022. There are now plans to launch an IPO in 2028, selling off the government's stake in the company to private investors and as part of that process, its debts are gradually being written off.

Energy intelligence firm, Argus, quoted industry sources as saying that the Nigerian government is cleaning up NNPC’s balance sheet to position the company for a public listing. Conforming this, the presidency in Abuja said that President Bola Tinubu had approved the write-off of NNPC’s dollar-denominated debts totalling $1.42bn, alongside local currency liabilities amounting to N5.57tn, bringing the total cleared obligations to about $5bn at current exchange rates.

According to the government, the debts relate to production sharing contracts under which NNPC acts as concessionaire on behalf of the federation, domestic crude supply obligations, repayment agreements, modified carry arrangements and unpaid royalties. However, the presidency did not disclose which components of the debts were denominated in dollars or naira.

In early 2025, the NNPC said it had begun the process of hiring IPO advisers, an issuing house and investor relations consultants, with Lagos, London and New York being considered as potential listing venues. Under plans being considered, the proposed offer could involve the sale of up to 20% of the NNPC’s equity.

Hence, clearing legacy liabilities is a critical prerequisite for any successful listing, as potential investors would require clarity on the company’s financial position. However, despite the latest debt write-offs, significant financial uncertainties remain, as Argus reported that the government’s decision does not extend to an estimated $42.4bn from the 2011 to 2017 period, which authorities say remains disputed and unresolved.

However, the NNPC has consistently maintained that it remitted all revenues due to the federation during that period and owes nothing to the government. In addition, debts accrued between January and October 2025 have not been forgiven.

Meanwhile, multiple industry sources told Argus that the NNPC is in talks to raise fresh financing, including a $5bn crude-backed forward-sale loan from Saudi Arabia’s state-owned oil giant, Aramco. Under the proposed structure, a special purpose vehicle created by NNPC, known as Green Falcon, would take the loan and use the funds to purchase discounted crude oil from NNPC under a forward-sale agreement.

Green Falcon would then repay Aramco, alongside other associated costs, from proceeds generated through the resale of the crude, the sources said. Part of the new loan is expected to be used to settle obligations linked to an earlier crude-backed financing arrangement known as Project Gazelle.