The Nigerian National Petroleum Company Limited (NNPCL) is facing growing scrutiny over the ₦7.13 trillion it recorded as energy security expenditure in its 2024 audited financial statements.
The figure, listed as **Under-Recovery/Energy Security Expense**, appeared in the company’s 2024 audit report released in November 2025. Although NNPCL did not provide a detailed breakdown of the expenditure, industry experts believe it may include costs related to fuel price support, exchange rate differentials and the protection of oil and gas infrastructure.
Despite mounting public interest, the company has yet to respond to questions about the expenditure. Calls and a text message sent by *Daily Trust* to NNPCL’s Chief Corporate Communications Officer, Andy Odeh, were not returned.
According to the audit report, the expenditure is tied to Section 64(m) of the Petroleum Industry Act (PIA) 2021, which provides that costs incurred by NNPCL while acting as the nation’s supplier of last resort for energy security reasons are chargeable to the Federation.
The report explained that government directives prevented NNPCL from selling Premium Motor Spirit (PMS) above a regulated price, even when import costs exceeded that price. The resulting difference—described as under-recovery—is either deducted from liabilities owed to the Federation or recognised as a receivable from the government.
NNPCL stated that under-recovery is recognised only when there is reasonable assurance that the amount will be reimbursed and all relevant conditions have been met.
The company disclosed that the Federal Government owed it a total of ₦17.512 trillion as of the end of 2024 for energy security interventions. The amount comprises ₦8.67 trillion in energy security costs and ₦8.84 trillion classified as other receivables from the Federation.
It further noted that the 2024 energy security expense of ₦7.13 trillion followed a similar expenditure of ₦4.8 trillion recorded in 2023.
According to the report, the energy security expense arises from the difference between the exchange rate used in determining the regulated PMS ex-coastal price and the prevailing exchange rate at the time import payments are settled. NNPCL said the costs are recoverable from the Federation under the provisions of the Petroleum Industry Act.
The report also stated that other receivables include advances made on behalf of the Federation and costs incurred in securing oil and gas assets under government-approved arrangements.
ADC Demands Full Disclosure
The African Democratic Congress (ADC) has called on President Bola Tinubu, NNPCL and the National Assembly to provide a full public account of the trillions of naira spent on energy security.
In a statement issued by its National Publicity Secretary, Bolaji Abdullahi, the party said the scale of the expenditure warrants greater transparency and accountability.
Abdullahi noted that while pipeline protection and energy security are legitimate government responsibilities, expenditures of such magnitude should be fully explained.
The party also called for the publication of all energy security and pipeline surveillance contracts awarded since President Tinubu assumed office in May 2023, including details of contractors, amounts paid, outcomes achieved and any independent value-for-money assessments.
According to the ADC, Nigerians deserve to know what benefits have been derived from the spending, especially at a time of widespread economic hardship.
Atiku Questions Spending
Former Vice President Atiku Abubakar also criticised the government’s handling of fuel subsidy reforms, arguing that the audit report suggests subsidy payments may have continued under a different description.
In a statement issued by his media aide, Phrank Shaibu, Atiku said Nigerians were told fuel subsidies had been removed in 2023, yet the audited accounts showed ₦7.13 trillion recorded as energy security expenses, which he described as a form of under-recovery.
He called on the government to explain who authorised the expenditure, who benefited from it and why such costs were not more clearly disclosed.
Experts Seek Greater Transparency
Former President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Kelvin Oye, described the liabilities as a continuation of fuel subsidy under a different label. He argued that the growing obligations raise concerns about transparency and fiscal sustainability.
Energy law expert, Prof. Dayo Ayoade of the University of Lagos, said the term “energy security” requires clearer definition. While it could legitimately include fuel supply stability, infrastructure protection and strategic energy interventions, he said the public deserves to know exactly what projects and expenditures make up the reported figure.
Ayoade also stressed the need to establish whether the spending followed appropriate corporate governance procedures and board approvals.
Petroleum economist, Prof. Wumi Iledare, said energy security encompasses maintaining the availability, affordability and resilience of energy supplies, which may require significant investment in infrastructure protection, surveillance and emergency response.
However, he noted that the central issue is whether the expenditure was properly classified, transparently disclosed, economically justified and delivered measurable value.
