The World Bank has raised concerns over the Nigerian National Petroleum Company Limited’s (NNPCL) handling of fuel subsidy proceeds, urging full transparency in oil revenue remittances to the federation account.
World Bank Lead Economist Alex Sienaert revealed that the NNPCL began transferring revenue gains from the phased-out fuel subsidy in January 2025 three months after the government officially scrapped the subsidy in October 2024.
He made this known during the launch of the May 2025 Nigeria Development Update (NDU) in Abuja.
“Since then, it has been remitting only 50 per cent of these gains, using the rest to offset past arrears,” Sienaert stated.
This partial remittance contradicts expectations that savings from the subsidy removal would bolster public finances, especially after President Bola Ahmed Tinubu declared the policy termination during his 29 May 2023 inauguration.
Incomplete Transfers Undermine Fiscal Stability
The World Bank’s analysis revealed that while the subsidy removal was a bold fiscal reform, the delayed and partial transfers by NNPCL have hindered the full realisation of expected benefits.
As of March 2025, only half of the projected subsidy savings had been received by the federal treasury.
“PMS subsidy was effectively ended last October, but revenue gains are yet to fully flow to the federation,” Sienaert explained.
Government’s Defence and Industry Realities
The Bank projected that oil would account for 70 per cent of government revenue this year if the national oil firm honours full remittance. However, the projection now faces risks due to the firm’s opaque fiscal practices.
An NNPCL insider, who spoke anonymously, defended the partial remittance, citing longstanding debts to oil trading partners and multinationals arising from unbudgeted production sharing contracts.
“Some of the monies are being deducted at source based on international agreements that aren’t budgeted,” the source said.
Despite the justification, experts are pressing for greater transparency.
Economist Dr Marcel Okeke asserted that the World Bank’s disclosure might have influenced the recent shake up in NNPCL’s leadership.
“There’s now a clear mandate for the new management to carry out house cleaning and restore transparency,” he said.
Transparency, Reform, and the Road Ahead
Finance Minister Wale Edun acknowledged ongoing gaps in fiscal transparency in the oil sector.
He assured that new data reporting frameworks are being developed to align government disclosures with international standards.
“We’re engaging revenue-generating agencies to standardise the data shared with the public,” Edun noted.
Meanwhile, Umar Yakubu of the Centre for Fiscal Transparency and Public Integrity (CeFTPI) called for a forensic audit of subsidy-related debts, accusing NNPCL of long-standing opacity and inefficiency.
“We’re paying debts without proper documentation or timeline. It’s a systemic failure that demands a full audit,” Yakubu said.
Economic Outlook: Gains, but at a Cost
Despite fiscal lapses, the World Bank credited Nigeria’s recent economic reforms including subsidy and FX policy changes for boosting revenue and foreign reserves.
GDP growth in 2023 reached its highest rate since 2015, while reserves rose from $32 billion to over $37 billion.
Taimur Samad, World Bank’s Country Director for Nigeria, projected inflation to average just above 22 per cent in 2025 if the Central Bank maintains its tight monetary policy.
“We’ve seen significant progress, but Nigeria must stay the course with structural reforms to strengthen macroeconomic foundations,” Samad said.
Public Frustration Over Slow Benefits
While economic indicators have improved, the cost of living remains high.
Sienaert noted the slow pace of the government’s cash transfer scheme, with only one third of the 15 million targeted recipients having received support.
Social media users echoed similar frustrations.
Citizens expressed scepticism over both the World Bank’s influence and the government’s commitment to transparency.
“Subsidy is gone, but nothing to show for it,” one user lamented, while others criticised both NNPCL and international lenders.
N13.7 Trillion Spent on Subsidy in 15 Years
The Nigeria Extractive Industries Transparency Initiative (NEITI) previously reported that the country spent N13.7 trillion ($74.4 billion) on petrol subsidies from 2005 to 2020.
The removal of this policy was seen as essential for redirecting funds to infrastructure and development.
Mele Kyari, former NNPCL GCEO, had described the subsidy regime as fraudulent and captured by a cabal, arguing that its removal would redirect funds to more productive sectors.
“The crude oil price is transparent, yet subsidy payments were abused and manipulated,” Kyari previously stated.
The Fight for Accountability Continues
The World Bank’s latest report has reignited debates on Nigeria’s oil revenue management.
As the country seeks to stabilise its economy and reduce poverty, transparency in the petroleum sector remains non negotiable.
With the public, economists, and development partners demanding answers, the Tinubu administration faces a decisive moment: to rebuild trust through accountability or risk undermining the fiscal gains already achieved.