By Obinna Uballa
Energy and public finance experts have expressed strong concerns over the disclosure that the Nigerian National Petroleum Company Limited (NNPC Ltd) incurred a staggering N17.5 trillion on pipeline protection, under-recovery and other energy-security related costs in the 2024 financial year.
Many described the figure as “alarming, indefensible, and in urgent need of forensic scrutiny”.
According to NNPC’s 2024 consolidated financial statements released this week, the company spent N7.13trn on energy-security costs – mostly to stabilise petrol prices amid a widening gap between landing cost and regulated pump price – while another N8.84trn was booked as “other receivables from the Federation”, covering security operations and advances to the Federal Government. A further N8.67tn represented direct under-recovery on refined petroleum products.
Though the national oil company announced a record N5.4trn profit after tax for 2024, a 64 per cent rise from the previous year, the disclosures have renewed debate about the true state of Nigeria’s downstream deregulation and the real cost of energy security.
Reacting on Thursday, analysts said the sheer scale of security-related expenditure deepens fears about persistent leakages, weak oversight, and entrenched opacity within the oil and gas sector.
The Chief Executive of Petroleumprice.ng, Jeremiah Olatide, said the numbers raise serious red flags. “N17.5tn spent on pipeline security and energy-security costs in a single year is outrageous and should be probed,” he said, according to Punch Newspaper. “This reinforces long-standing concerns about internal corruption and collusion with oil thieves. How do you justify such expenditure when crude production still hovers around 1.4–1.5 million barrels per day?”
Olatide argued that the expenditure bears no correlation with Nigeria’s output realities, insisting that continuous losses to theft and vandalism point to systemic rot.
He said the disclosures should immediately trigger a full-scale forensic audit by the National Assembly and industry regulators.
Public finance analyst and co-founder of Dairy Hills, Kelvin Emmanuel, linked the spiralling security costs to decades-old allegations that pipeline protection contracts have become an opaque channel for rewarding armed groups.
Writing on X, Emmanuel said the figures in the financial statement validate claims that crude oil barrels, not just cash payments, are being allocated to militant groups as part of security arrangements.
“For months I’ve said government is giving crude oil daily to militants for pipeline protection,” he wrote. “Now that NNPC’s statement shows N7.1tn was disbursed in 2024 from supposed subsidy savings for pipeline security contracts, the 78,000 to 110,000 barrels per day estimate is now confirmed.”
He added that the scale of spending underscores the need for an immediate overhaul of Nigeria’s pipeline protection architecture, which he argued has remained opaque and vulnerable to abuse for more than a decade.
Subsidy controversy resurfaces
The disclosures cast fresh doubt on President Bola Tinubu’s May 29, 2023 declaration that “fuel subsidy is gone”, with analysts noting that the under-recovery mechanism remains effectively active, only now buried within NNPC’s books and reimbursed by the Federation under Section 64(m) of the Petroleum Industry Act.
As of December 2024, outstanding energy-security expenses owed to NNPC had risen to N8.67trn, while the company’s receivables from the government surged, raising concerns about cash-flow strain and long-term fiscal sustainability.
Concern over rising leverage and opaque reimbursements
While financial analysts at Proshare described NNPC’s 2024 results as “commercially encouraging”, they warned that the quality of earnings requires closer oversight due to surging finance costs, rising receivables, and an expanding debt-to-equity ratio.
Experts say the situation underscores a broader problem: the absence of transparent, timely reimbursement mechanisms, the ballooning cost of protecting energy infrastructure, and continued government influence over petrol pricing.
Across the industry, the consensus is that Nigeria cannot sustain such massive security-linked expenditures without rigorous oversight.
Olatide summed up the mood: “The numbers are too large, too vague, and too inconsistent with output and security realities. Nigeria needs a transparent, independently verified audit of every naira spent.”
