The Nigerian National Petroleum Company Limited paid N686.94bn in interest on its forward sale agreements in 2025, representing a 171.4 per cent increase from the N253.14bn paid under the arrangements in 2024.
The sharp rise in interest payments came as the company significantly increased its use of forward sale agreements, with additional drawdowns almost doubling during the year, according to an analysis of the company’s 2025 audited financial statements on Monday.
The forward sale arrangements, which allow the company to receive funds or value against future crude oil supplies, had outstanding contract liabilities of N7.10tn as of December 31, 2025, up from N4.98tn a year earlier.
This means the liabilities increased by N2.13tn, or 42.7 per cent, in one year. The figures also showed that NNPC’s interest payments increased by N433.80bn in 2025, despite the company making substantially higher principal repayments during the year.
In 2025, NNPC made principal repayments of N2.76tn, compared with N942.08bn in 2024. This represents an increase of N1.82tn, or 192.7 per cent. In simple terms, the figures show that “NNPC borrowed more through forward-sale arrangements than it repaid during the year.” The company recorded N5.57tn in additional drawdowns, compared with N2.76tn in principal repayments.
However, the additional drawdowns made during the year were significantly higher than the repayments. NNPC recorded N5.57tn in additional drawdowns in 2025, compared with N2.81tn in 2024. The amount therefore rose by N2.76tn, or 98.4 per cent, year-on-year.
The combination of new drawdowns and other movements pushed the outstanding forward-sale obligations higher despite the increase in principal repayments.
The financial statements also showed that the premium attached to the contract liabilities increased sharply to N666.66bn in 2025, from N249.38bn in 2024. That represents an increase of N417.28bn, or 167.3 per cent.
The premium represents an additional amount recognised on the contract liabilities, while the interest payments represent the financing cost settled during the year. That means “the cost attached to the forward-sale liabilities rose far faster than the outstanding obligations themselves.”
A major change in the portfolio was the emergence of Project Leopard, which had no outstanding balance at the beginning of 2024 but ended 2024 with N1.26tn. In 2025, an additional N4.83tn was drawn under the project.
After a principal repayment of N420.81bn, a premium of N340.21bn, an interest payment of N305.49bn and a translation difference of N325.27bn, Project Leopard closed 2025 with a liability of N5.38tn.
The N5.38tn balance represented about 75.7 per cent of NNPC’s entire N7.10tn forward-sale contract liabilities at the end of 2025. Project Panther, another major arrangement, closed 2025 with N929.88bn, compared with N912.91bn in 2024, an increase of N16.97bn, or 1.9 per cent.
The NLNG SPDC arrangement fell from N637.88bn to N609.24bn, a decline of N28.64bn, or 4.5 per cent, while the NLNG TEPNG liability dropped from N435.43bn to N184.82bn, representing a reduction of N250.61bn, or 57.6 per cent.
Project Yield recorded one of the biggest changes. Its liability stood at N1.46tn at the end of 2024 but was fully extinguished by December 2025 after principal repayments of N1.52tn during the year.
The company also transferred N265.73bn from DSDP and other customer-related contract liabilities to trade customers in 2025. This was higher than the N211.46bn transfer recorded in 2024 by N54.28bn, or 25.7 per cent.
Another notable movement was the translation difference, which swung from a positive N1.18tn in 2024 to a negative N394.08bn in 2025. This represents a deterioration of about N1.57tn between the two years.
Overall, the closing contract liabilities increased from N4.98tn in 2024 to N7.10tn in 2025, despite the company making nearly three times as much in principal repayments and substantially increasing its interest payments.
The figures underline the growing financial weight of NNPC’s forward sale arrangements as the national oil company continues to use crude-backed transactions to raise funding and meet its financial obligations.
Unlike conventional short-term trade transactions, forward sale agreements can create significant future delivery obligations because funds or other consideration are received before the underlying crude oil is supplied. The resulting contract liabilities are therefore carried on the company’s books until the obligations are settled through crude deliveries, repayments, transfers or other recognised adjustments.
Recently, the Group Chief Executive Officer of Nigerian National Petroleum Company Limited, Bashir Ojulari, said that the company had adopted a new payment model for refinery rehabilitation, decrying the previous model of paying with crude oil, which he said was causing financial leakages for the company.
Ojulari disclosed this during a media parley, explaining that paying for the refineries’ repair with crude oil did not yield any net positive outcome. According to Ojulari, the company funded every contractor and financial structure itself, yet none of the partners held any stake in the refinery’s actual performance.
He said, “What we have learned from the past rehabilitations of the refineries was multiple, but I’ll remind you again of the two of them that I’ve always talked about. One was that the model we have used before meant that we would incentivise people who work on the refinery, and there was no skin in the game.
“We paid for contractors, we paid for financing, we structured and paid for everything we pay for, right? And then none of those parties that were working with us had a stake in the performance of the refinery after their work. It’s very simple. How do we pay? We pay with our crude.
“Last year we stopped that. Part of the revenue you’ve seen in 2025 was part of the leakages that we stopped. It was money going in that was not bringing net positive outcomes. So by stopping that leakage last year, that revenue, both the crude and the extra money we’re spending has come into what that was pulling together to report.”
