The World Bank has raised concerns over Nigeria’s fiscal transparency, revealing that the Nigerian National Petroleum Company Limited has only been remitting 50 per cent of the revenue gains realised from the removal of the Premium Motor Spirit subsidy to the Federation Account.
This was disclosed in the latest edition of the World Bank’s Nigeria Development Update, titled “Building Momentum for Inclusive Growth.” The report highlights lingering issues with revenue management and remittance practices following the deregulation of the downstream petroleum sector.
According to the report, of the N1.1 trillion realised by NNPCL from crude oil sales and other related income in 2024, only N600 billion was transferred to the Federation Account. The remaining N500 billion, the World Bank said, was retained by the national oil company and used to offset historic debt arrears.
The World Bank explained that, “Despite the subsidy being fully removed in October 2024, NNPCL started transferring the revenue gains to the Federation only in January 2025. Since then, it has been remitting only 50 per cent of these gains, using the rest to offset past arrears.”
In 2023, President Bola Ahmed Tinubu received praise from international financial institutions after announcing the removal of Nigeria’s long-standing and controversial fuel subsidy. The move, seen as a critical step in broader economic reforms, resulted in a sharp rise in pump prices, tripling the cost of petrol overnight. However, it was projected to save the country billions of dollars annually and free up resources for critical infrastructure and social investments.
Public outcry, however, led to a delay in full deregulation. The Federal Government eventually allowed the complete removal of the subsidy in October 2024, following the start of operations at the Dangote Refinery.
Despite this development, the World Bank noted that the remittance of expected revenue windfall by NNPCL was significantly delayed. It only began in January 2025, three months after the full deregulation took effect. Moreover, the state-owned oil company has since continued to remit just half of the projected revenues.
The World Bank stressed the importance of full compliance, noting that the Federal Government’s fiscal projections for 2025 assume that 70 per cent of its revenues will come from oil, with the remaining 30 per cent from non-oil sources. This projection hinges on full remittance of subsidy savings.
“The fiscal outlook remains cautiously optimistic but hinges on the necessary consolidation of recent advances. First, 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,” the report said.
A detailed breakdown showed that while gross revenues from Nigeria’s key revenue-generating agencies surged from N16.5 trillion in 2023 (7 per cent of GDP) to N29.5 trillion in 2024 (10.6 per cent of GDP), NNPCL’s remittance fell to N600 billion in 2024, down from N1.1 trillion in 2023. The World Bank attributed this drop to the “implicit PMS subsidy” that lingered until the end of the third quarter of 2024.
“NNPCL was the only laggard, remitting just N0.6tn to FAAC in 2024, down from N1.1tn in 2023, largely due to the implicit PMS subsidy, which remained in place until the end of September 2024. Although the subsidy was fully removed on October 1, 2024, NNPCL did not start transferring the resulting revenue gains to the Federation until January 2025. From that point, it began remitting 50 per cent, with the other half being used to settle past arrears.”
The report also provided an update on financial claims between the Federal Government and the national oil company. “As of February 2025, the bank noted that NNPCL’s claimed arrears stood at N7.8tn, while the Federation’s claims totalled N6.1tn, leaving net arrears of N1.7tn still owed to the national oil company.”
Despite the significant increase in total gross revenues across key agencies such as the Federal Inland Revenue Service, the Nigeria Customs Service, and the Nigerian Upstream Petroleum Regulatory Commission, the report underscored that NNPCL’s remittance performance remained notably weak.
The report noted that “Gross revenues collected by Nigeria’s main revenue agencies surged in 2024, despite minimal remittances from NNPCL. FAAC data show that gross revenues collected by the main revenue agencies (FIRS, NCS, NNPCL, and NUPRC) rose significantly from N16.5tn (7 per cent of GDP) in 2023 to N29.5tn (10.6 per cent of GDP) in 2024.”
“The largest revenue increases came from FX-denominated sources that benefited from the removal of the FX subsidy, including oil revenues (royalties, taxes, signature bonuses), customs revenues, and the foreign trade-related component of VAT.”
To improve fiscal discipline and transparency, the World Bank recommended a forensic audit of NNPCL’s financial operations. It also called for the adoption of standardised reporting templates to the Federation Account Allocation Committee, and enhanced public financial management systems.
The Bretton Woods institution cautioned that Nigeria’s fiscal consolidation could be undermined if the full benefits of subsidy removal are not channelled into the Federation Account. The consequences, it said, could include limited government investment in infrastructure and essential social programmes.
It added, “Resolving any remaining net arrears and channelling the full benefits of subsidy reform to the Federation is critical for sound fiscal management.”
“Improve public finance management. Revenues are still low, constraining development spending. Ensure that revenue gains from the removal of the PMS subsidy flow to the Federation. The bank also advised to improve transparency in accounting for oil revenues by conducting a forensic audit of NNPCL, and adopting standardised reporting to FAAC.”