The Nigerian National Petroleum Company Limited (NNPC) spent N686.94 billion servicing interest on crude-backed financing arrangements in 2025, as its outstanding obligations under forward sale agreements climbed to N7.10 trillion, highlighting the rising cost of securing funds against future crude oil supplies.
The interest expense increased by N433.80 billion from N253.14 billion recorded in 2024, representing a 171.4 per cent year-on-year rise, according to the company’s 2025 audited financial statements.
The increase came as NNPC expanded its use of the financing arrangements. Additional drawdowns rose to N5.57 trillion in 2025 from N2.81 trillion in the previous year, while principal repayments increased to N2.76 trillion from N942.08 billion..
Explaining the previous arrangement, Ojulari said NNPC financed contractors and associated financing structures without ensuring that the parties involved had a direct stake in the refineries’ performance after rehabilitation.
“What we have learned from the past rehabilitations of the refineries was multiple,” he said, adding that the previous model incentivised contractors without adequately linking their compensation to operational outcomes.
“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,” Ojulari said.
He added that the company had discontinued the practice of paying for refinery repairs with crude oil.
“Last year we stopped that. Part of the revenue you’ve seen in 2025 was part of the leakages that we stopped,” he said, arguing that the previous arrangement involved spending that did not deliver positive commercial outcomes. that was pulling together to report.”
Despite the higher repayments, outstanding contract liabilities grew by N2.13 trillion, or 42.7 per cent, from N4.98 trillion at the end of 2024.
The premium attached to the contract liabilities also increased substantially, reaching N666.66 billion in 2025 compared with N249.38 billion a year earlier, an increase of 167.3 per cent.
Project Leopard accounted for the largest share of the obligations, with its outstanding balance rising to N5.38 trillion by December 2025. This represented approximately 75.7 per cent of NNPC’s total forward sale liabilities.
The project recorded additional drawdowns of N4.83 trillion during the year, alongside principal repayments of N420.81 billion, interest payments of N305.49 billion and a premium of N340.21 billion.
Other arrangements recorded mixed movements. Project Panther’s outstanding liability increased to N929.88 billion from N912.91 billion, while the NLNG SPDC balance declined to N609.24 billion from N637.88 billion.
The NLNG TEPNG liability fell to N184.82 billion from N435.43 billion, while Project Yield’s N1.46 trillion outstanding balance at the end of 2024 was extinguished following principal repayments of N1.52 trillion in 2025.