The government owes the Nigerian National Petroleum Corp. (NNPC) 7.8 trillion naira ($4.9 billion) in subsidy debts accumulated from January to July, according to NNPC’s Chief Financial Officer, Umar Ajiya. This debt represents a significant portion of the 19.4 trillion naira the government plans to collect in revenue this year.

The gasoline subsidy, which was initially removed in May of last year by President Bola Tinubu to improve the state's finances after debt-service costs surged to 96% of revenues, was reinstated in August to mitigate the impact of soaring inflation, currently at 33%, on Nigerians.

To address this, the government will allow NNPC to offset about 2.2 trillion naira it owes the state against the subsidy debt, Ajiya said in an interview following the company’s results announcement in Abuja, the capital.

The debt arose because NNPC is the sole importer of gasoline, which it sells to marketers at below-market prices to keep fuel costs low. At NNPC retail stations in Lagos, a liter of fuel sells for about 617 naira, significantly cheaper than the over 1,000 naira it fetches in neighboring countries, leading to cross-border smuggling.

NNPC reported a profit of 3.3 trillion naira in 2023, up from 2.55 trillion naira the previous year. The company plans to invest $6.6 billion in its operations this year, largely through borrowing, according to Ajiya.

The company also anticipates that crude oil and condensate production will rise to 2 million barrels per day by the end of the year, up from an average of 1.75 million barrels per day in August, thanks to improved security measures to curb oil theft, said Oritsemeyiwa Eyesan, the executive vice president of NNPC's upstream division.

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