Record 2024 spending on pipeline protection, under-recovery and security operations raises transparency concerns despite NNPCL’s profit surge
Nigeria’s financial obligations to the Nigerian National Petroleum Company Limited have ballooned to an unprecedented N17.5tn, representing debts owed for pipeline security and energy-related operations the national oil company carried out on behalf of the Federation in the 2024 financial year.
The staggering figure has sparked intense criticism from analysts, who are demanding a forensic audit of the expenditure amid concerns about persistent leakages, low crude production and deepening opacity within NNPCL.
A breakdown of the spending, drawn from NNPCL’s 2024 consolidated financial statements and reviewed on Thursday, shows that N7.13tn was incurred as energy-security costs, primarily to stabilise petrol prices whenever exchange-rate movements increased the ex-coastal landing price of refined products.
The disclosures indicate that a huge chunk of the N17.5tn went into securing Nigeria’s oil and gas infrastructure, including pipeline surveillance, repairs, anti-theft operations and other security interventions designed to prevent supply disruptions across the country.
The revelation comes just days after NNPCL announced a Profit After Tax of N5.4tn for 2024, it’s strongest performance since transforming into a limited liability company. Group Chief Executive Officer, Bayo Ojulari, unveiled the results at a press briefing in Abuja on Monday.
The 2024 profit marks a 64% growth from the N3.297tn recorded in 2023, driven by higher crude output, cost-reduction efforts and improved efficiency across its assets.
Under-recovery still active despite “subsidy is gone” declaration
According to the financials, N8.67tn of the total amount spent in 2024 was tied directly to under-recovery on refined petroleum products, an indicator that fuel subsidy-related costs remain embedded in the system despite the Federal Government’s May 29, 2023 declaration that “fuel subsidy is gone.”
Under Section 64(m) of the Petroleum Industry Act 2021, any cost borne by NNPCL as the “supplier of last resort” for the purpose of energy security is to be reimbursed by the Federation. This legal provision compelled NNPC to sell Premium Motor Spirit at a regulated price even when the actual import cost was significantly higher.
The difference between the true landing cost of PMS and the government-approved pump price constitutes the under-recovery, which is then booked against the Federation’s accounts either as reduced liabilities or receivables.
The report showed that the year opened with an under-recovery balance of N6.25tn, slightly adjusted to N6.21tn after factoring in exchange-rate differences. Energy-security costs surged to N7.13tn in 2024, up from N4.843tn in 2023, an increase of nearly 39%.
An additional N8.84tn was recorded as “Other Receivables from the Federation,” reflecting advances to the Federal Government and security-related expenses incurred under an approved cost-sharing arrangement.
The disclosures highlight the mounting strain on NNPCL’s balance sheet and raise fresh questions about how and when the Federal Government intends to settle its obligations.
Infrastructure security costs nearly double
The N17.5tn figure nearly doubles the N9.36tn recorded in 2023. The rising burden has revived public debate about the transparency of Nigeria’s fuel-pricing system, the true state of subsidy removal, and the effectiveness of heavy security spending in protecting critical oil assets.
Despite the massive allocations, Nigeria’s crude production continues to hover between 1.4m and 1.5m barrels per day, well below its potential output of up to 3m barrels per day.
More financial details
The report also shows that throughput charges, paid as commissions to private depot operators, rose to N145.7bn in 2024. Marketing and distribution expenses reflected the cost of transporting refined products to depots within and outside Nigeria.
Financial analysis group Proshare described NNPCL’s results as “commercially encouraging”, highlighting an 87.89% jump in total revenue from N23.99tn in 2023 to N45.08tn in 2024.
Crude oil sales more than doubled to N29.21tn, while revenues from petroleum products grew by 35.39%, natural gas and power rose 125.66%, and services increased by 110.88%. Power revenue alone jumped from N94m to N9.42bn, signalling deeper participation in the gas-to-power value chain.
However, Proshare cautioned that the rise in finance costs, narrowing margins and increasing leverage ratio call for tighter cash-flow discipline and more robust liability management.
Experts raise alarm
Energy economists have expressed outrage over the N17.5tn energy-security bill, describing it as “indefensible” and demanding an independent probe.
The CEO of Petroleumprice.ng, Jeremiah Olatide, said the numbers validate long-standing fears of internal collusion and systemic leakages within NNPC.
“N17.5tn in a single year for pipeline protection and energy security is outrageous and must be investigated,” he said. “Oil theft persists because of corruption and internal collaboration. Production remains low, nothing justifies this level of spending.”
Public finance analyst and Dairy Hills co-founder, Kelvin Emmanuel, echoed similar concerns, alleging that crude barrels, not cash are being allocated to armed groups under pipeline surveillance contracts.
Writing on X on Wednesday, Emmanuel claimed the N7.1tn disbursed for pipeline security in 2024 confirms suspicions of crude oil being handed to non-state actors.
“This validates what I’ve been saying, that militants are receiving barrels daily under the guise of security contracts,” he wrote.
He argued that Nigeria urgently needs open contracting, third-party audits and a fundamental overhaul of the opaque framework governing pipeline protection.
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