The Nigerian National Petroleum Company Limited recorded about N27.76 trillion in cost of sales, selling and distribution expenses, and general and administrative expenses in 2025, according to an analysis of its audited financial statements.

The figure represented about 80.4 per cent of the company’s N34.52 trillion revenue for the year and has prompted attention on the cost structure of the national oil company.

However, the N27.76 trillion figure does not appear as a single line item called “operating expenses” in NNPC’s accounts. It is derived from separate components of the audited financial statements, including N25.14 trillion in cost of sales, N33.1 billion in selling and distribution expenses and N2.59 trillion in general and administrative expenses.

The figures came as NNPC reported a profit after tax of N7.2 trillion for 2025, up from N5.4 trillion in 2024. The company also reported revenue of N34.5 trillion, EBITDA of N18 trillion and operating cash flow of N12.8 trillion.

Cost structure compared with other oil companies

The scale of NNPC’s expenditure becomes more notable when compared with financial figures reported by other national oil companies.

Using an average exchange rate of N1,518 to the dollar for 2025, the N27.76 trillion cost translates to approximately $18.29 billion, while the company’s revenue was about $22.74 billion.

Brazil’s state-controlled Petrobras reported $89.2 billion in sales revenue and approximately $16.3 billion in operating costs in 2025.

On the figures reported, NNPC’s operating costs were about 13 per cent higher than Petrobras’ despite Petrobras generating almost four times as much revenue.

The comparison also shows a difference in revenue generated for each dollar spent on operating costs. NNPC generated approximately $1.24 in revenue for every dollar spent on the identified operating costs, compared with about $5.46 for Petrobras.

Saudi Aramco reported $445.65 billion in revenue and other income related to sales in 2025, alongside $257.17 billion in operating costs. Its operating costs represented approximately 57.7 per cent of revenue.

Norway’s Equinor reported $106.46 billion in revenue and other income and $81.11 billion in total operating expenses, putting its operating expenses at about 76.2 per cent of revenue.

Angola’s Sonangol reported consolidated turnover of $9.15 billion, EBITDA of $2.63 billion and net profit of more than $750 million in 2025.

The comparisons provide context for NNPC’s cost structure, although differences in production volumes, business portfolios, downstream activities and accounting treatment mean that revenue-to-cost ratios alone do not establish which company is more efficient.

Cost of sales accounts for most expenditure

The largest component of NNPC’s identified operating costs was cost of sales, which stood at N25.14 trillion in 2025.

The figure was lower than the N33.3 trillion recorded in 2024 but still represented the overwhelming share of the company’s total costs for the year.

Petroleum products accounted for N1.79 trillion, while depreciation of oil and gas properties stood at N3.71 trillion.

Depreciation is an accounting expense that allocates the cost of an asset over its useful life and does not represent a direct cash payment during the year.

Royalties accounted for N4.66 trillion, while direct well expenses were N4.15 trillion.

NNPC also reported N1.69 trillion in flow-station expenses, N1.86 trillion for gas purchased and N2.79 trillion for crude oil purchased.

Other production-related expenditure included N1.06 trillion for crude handling and port charges, N499 billion for gas flaring and N144.4 billion in allocated technical and production costs.

The company also recorded N514.7 billion as a Niger Delta Development Commission levy, N66.2 billion for freight, insurance and other charges and N74.5 billion for safety, environmental and pollution-control expenses.

Another N174.6 billion was recorded for variation in crude stock.

Other direct and administrative costs

NNPC spent N13.8 billion on pipeline maintenance, N213.9 billion on insurance and security, N254.5 billion on labour, N14.1 billion on technical and consultancy charges and N61.6 billion on medical expenses.

The company also reported N1.28 trillion in other direct costs.

According to NNPC, these costs cover the maintenance and operation of oil and gas production assets, including wells, production facilities, pipelines and processing infrastructure.

They also include production chemicals, integrity management, repairs and other field-support services directly connected to production activities.

Beyond the cost of sales, NNPC recorded N33.1 billion in selling and distribution expenses.

The company said these costs were related to services acquired by NNPC Retail for transporting petroleum products to depots within and outside Nigeria.

General and administrative expenses amounted to N2.59 trillion, compared with N3.5 trillion in 2024.

Employee benefits represented N813.9 billion and covered salaries and wages, staff allowances, welfare expenses and other long-term employee benefits.

Depreciation of other property, plant and equipment amounted to N665.8 billion, while depreciation of right-of-use assets stood at N109.3 billion.

Other administrative expenses included N87.3 billion in professional and consultancy fees, N86.4 billion for software licences and maintenance, N129.1 billion for security, N114.8 billion for transport and travelling and N111 billion for training and recruitment.

NNPC also recorded N89.3 billion in insurance costs, N29.2 billion for local community development, N10.3 billion in donations, N33.5 billion for rent and rates and N9.2 billion in bank charges.

Another N282.7 billion was reported under other expenses, which the company said related to joint-venture material-handling expenses and JV personnel costs.

Profit increased despite lower revenue

The high cost structure came in a year when NNPC’s revenue declined by 24 per cent to N34.5 trillion, largely due to lower crude oil prices and reduced volumes of white products following market deregulation in 2024.

Despite the decline in revenue, profit after tax increased by 33 per cent to N7.2 trillion from N5.4 trillion in 2024.

NNPC attributed the improved performance to stronger operational efficiency, cost discipline and improved recovery of outstanding receivables.

The company said it also reduced general and administrative expenses by about a quarter during the year.

According to NNPC’s financial management, G&A expenses fell from about eight per cent of revenue in 2024 to about seven per cent in 2025 despite the lower revenue base.

The recovery of long-standing receivables also contributed to the improvement in profit because some provisions previously made against those receivables were reversed.

Production reaches five-year high

NNPC’s 2025 results also showed improvements in production.

Crude oil and condensate production averaged 1.77 million barrels per day, the company’s highest level in five years.

Natural gas output averaged 7.2 billion standard cubic feet per day, representing a three-year high.

The company said crude oil and condensate production increased to 565.8 million barrels for the year, while natural gas production reached 2,606.2 billion standard cubic feet.

NNPC said its improved production performance, stronger collections and cost-management measures contributed to the stronger financial result.

NNPC targets further cost reductions

The company has said it intends to continue improving operational efficiency and reducing costs.

Its Chief Financial Officer, Adedapo Segun, said unit operating costs in the upstream business fell year-on-year and that further reductions were expected.

NNPC is also targeting crude oil production of two million barrels per day by 2027 and three million barrels per day by 2030.

The company plans to mobilise $60 billion in upstream, midstream and downstream investments by 2030 while advancing major gas infrastructure projects, including the Ajaokuta-Kaduna-Kano pipeline, the Escravos-Lagos Pipeline System and the Obiafu-Obrikom-Oben gas pipeline.

The financial results therefore present two sides of NNPC’s 2025 performance: a significant increase in profit and production alongside a substantial cost base.

The company’s ability to reduce unit costs, improve collections and translate higher production into stronger earnings will remain important as it pursues its longer-term investment and production targets.

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Dangote Petroleum Refinery imported a total of 40.40 million barrels of crude oil between May and June 2026, spending approximately $4.48 billion on feedstock purchases as it continued to ramp up operations and diversify its supply sources. The refinery’s significant crude imports underscore its growing role in Nigeria’s downstream petroleum sector and regional energy markets.

The imports were sourced from multiple countries, reflecting the refinery’s strategy of broadening its crude procurement channels amid domestic supply constraints. Recent purchases have included crude grades from Nigeria, Libya, and the United Arab Emirates, marking the refinery’s first-ever imports of Middle Eastern crude.

Industry data indicates that the refinery requires between 13 and 15 cargoes of crude oil monthly to sustain operations at higher production levels. While the facility continues to receive supplies from Nigeria’s state-owned oil company, imported crude has become increasingly important in meeting its feedstock requirements.

The refinery has steadily expanded production since commencing operations and recently exceeded its nameplate capacity of 650,000 barrels per day during performance tests. Analysts say the refinery’s increasing crude imports and rising output are strengthening its position as a major supplier of refined petroleum products within Nigeria and across international markets.

Experts believe the refinery’s aggressive crude procurement strategy could improve fuel availability, reduce dependence on imported petroleum products, and enhance Nigeria’s refining capacity. However, they also note that sustained operations will depend on reliable feedstock supply arrangements and continued investments in refining infrastructure.

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Dangote Petroleum Refinery has imported its first crude oil cargoes from the United Arab Emirates, marking a significant expansion of its crude sourcing strategy as the company seeks to strengthen feedstock availability amid persistent domestic supply constraints. The refinery purchased two cargoes of UAE crude, representing its first procurement from the Middle East.

The development signals a shift in the refinery’s crude procurement approach, which has largely depended on Nigerian, African, and United States crude grades. The move comes as the company continues to pursue a broader range of crude options to support stable operations and improve flexibility in its refining activities.

Dangote Refinery Chief Executive Officer, David Bird, had previously highlighted challenges associated with domestic crude availability and operational issues at some export terminals, noting that these constraints made it necessary to source additional supplies outside Nigeria.

Industry data indicates that the refinery has already imported crude grades from Angola, Ghana, Libya, and Guyana in 2026 as part of its efforts to diversify feedstock sources and maintain production levels. The refinery is also seeking to increase the number of crude grades it can process in pursuit of a fully merchant refining model.

Despite ongoing efforts by regulators to improve domestic crude supply arrangements, the refinery has increasingly relied on imported crude to sustain operations. Analysts say the latest UAE purchases underscore the refinery’s growing integration into global crude markets and its determination to secure reliable feedstock supplies.

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Cooking gas imports are increasing as the Federal Government moves to address rising Liquefied Petroleum Gas (LPG) prices and supply challenges affecting households across Nigeria.

The decision comes amid a sharp increase in cooking gas prices, with the cost of LPG rising significantly in recent months. Industry operators say supply shortages and distribution constraints have contributed to higher prices, placing additional pressure on consumers already facing rising living costs.

To improve market availability, marketers have committed to importing larger volumes of LPG while regulators work with key stakeholders to stabilize supply. Government officials said the move is intended to ease scarcity, improve access, and help moderate prices in the domestic market.

Industry sources noted that local production has not been sufficient to fully meet growing domestic demand. Although Nigeria has increased its local LPG output in recent years, market participants say supply disruptions and operational challenges have continued to affect availability across parts of the country.

The government has also engaged industry stakeholders, including producers, marketers, and regulators, to ensure uninterrupted supply and improve market stability. Officials emphasized that efforts are underway to strengthen domestic availability while reducing pressure on consumers.

Stakeholders have identified foreign exchange volatility, logistics expenses, infrastructure limitations, and fluctuations in international LPG prices as some of the major factors driving recent price increases. These challenges have made it more difficult to keep cooking gas affordable despite improvements in domestic production.

Retailers and consumers have continued to report difficulties accessing cooking gas in some locations, with prices reaching record levels in several markets. Industry groups warn that sustained supply constraints could further impact affordability if additional measures are not implemented.

Analysts believe that increased imports, combined with stronger domestic production and improved distribution infrastructure, could help stabilize the market over time. However, they note that broader economic factors will continue to influence LPG pricing and availability in the near term.

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Nigeria’s power generation companies have raised fresh concerns over the growing financial challenges facing the electricity sector, warning that increasing debt obligations and stranded generation capacity continue to threaten the industry’s sustainability.

Industry operators said the sector has recorded an additional debt burden estimated at ₦1 trillion, adding to longstanding liabilities that have accumulated over the years. They noted that persistent payment shortfalls across the electricity value chain have placed significant pressure on generation companies, limiting their ability to meet operational and financial obligations.

The companies also expressed concern over stranded power capacity valued at approximately ₦2.376 trillion. According to industry stakeholders, stranded power refers to electricity generation capacity that remains underutilised due to transmission, distribution, and market constraints despite investments made to increase production capacity.

Power producers argued that the continued inability to fully evacuate and distribute generated electricity has resulted in substantial financial losses while discouraging further investment in the sector. They maintained that significant resources have been committed to expanding generation capacity, yet much of the available power cannot reach end users because of infrastructure limitations.

Stakeholders further highlighted the broader liquidity crisis affecting the Nigerian Electricity Supply Industry, noting that outstanding invoices, foreign exchange pressures, and rising operational costs have continued to weaken the financial position of generation companies. Industry figures indicate that debt owed to power producers has risen sharply over the years, creating challenges for plant maintenance, gas procurement, and future investments.

The Association of Power Generation Companies has repeatedly called for urgent intervention to address payment backlogs and improve market efficiency. Industry leaders believe that resolving the debt burden and eliminating constraints responsible for stranded capacity would significantly improve electricity supply and attract fresh investment into the sector.

Experts have also stressed the need for stronger coordination across the generation, transmission, and distribution segments of the electricity market. They argue that without improvements in infrastructure and market settlement mechanisms, Nigeria may continue to face challenges in fully utilising its installed power generation capacity despite growing demand for electricity.

As discussions on sector reforms continue, power producers remain hopeful that government-led initiatives aimed at addressing outstanding liabilities and improving liquidity will provide relief and support long-term stability within the electricity industry.

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President Bola Ahmed Tinubu says the Federal Government is executing infrastructure projects on an unprecedented scale, with more than 2,700 kilometres of highways and major roads currently under construction, reconstruction or rehabilitation across Nigeria.

Speaking during a nationwide address marking the third anniversary of his administration, the President said the investments are aimed at improving connectivity, boosting economic activity, creating jobs and enhancing living standards.

2,700km of Roads Under Construction Nationwide

Tinubu said major road projects are ongoing across the country, including:

• Lagos-Calabar Coastal Highway
• Sokoto-Badagry Super Highway
• Abuja-Kaduna-Zaria-Kano corridor
• East-West Road

He noted that several sections of these projects are already completed or nearing completion, with the goal of improving regional trade and strengthening national logistics networks.

The administration says the road programme is part of a broader effort to modernise transport infrastructure and address long-standing connectivity challenges affecting economic growth.

Renewed Hope Housing Programme Delivers Over 10,000 Units

In the housing sector, Tinubu said the Renewed Hope Housing Programme and the Federal Housing Authority (FHA) are delivering more than 10,000 housing units across 14 states and the Federal Capital Territory.

Major Renewed Hope Cities in Abuja, Lagos and Kano are also progressing steadily.

According to the President, the housing programme has generated over 300,000 jobs, largely through construction-related activities, materials supply and associated services.

Energy Sector Investments Expand Refining and Gas Capacity

Tinubu disclosed that the $5 billion Nigeria LNG Train 7 project is nearing completion, with expectations of boosting gas production and export capacity.

He also said ongoing investments in modular and large-scale refineries are reducing Nigeria’s dependence on imported petroleum products and easing pressure on foreign exchange.

On electricity, the President said reforms are being implemented to address legacy debts, expand transmission infrastructure and support renewable energy development.

Rail Modernisation to Boost Connectivity

The administration also confirmed continued rail modernisation projects aimed at improving national logistics and transport efficiency.

Tinubu said improved rail systems will reduce transportation costs, strengthen economic integration and enhance movement of goods and passengers across the country.

Infrastructure Linked to Economic Reforms

The President linked the infrastructure drive to broader economic reforms introduced since 2023, including fuel subsidy removal and foreign exchange unification.

He acknowledged the inflationary impact of the reforms but maintained that they have strengthened public finances, improved investor confidence and created a more stable economic foundation.

Impact on Housing and Urban Development

Experts say the infrastructure push could significantly reshape Nigeria’s housing and real estate sector by opening new growth corridors and increasing demand for residential developments.

Improved roads, rail systems and energy access are expected to drive urban expansion, raise land values and stimulate private sector investment in housing.

President Tinubu’s announcement underscores a large-scale infrastructure agenda spanning roads, housing, rail and energy. With over 2,700 kilometres of road projects underway and major housing and energy investments in progress, the administration says it is laying the foundation for long-term economic transformation.

As implementation continues, attention will remain on delivery timelines, financing sustainability and the real impact on households, businesses and national development outcomes.

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The Trade Union Congress of Nigeria (TUC) has warned that the price of Premium Motor Spirit (PMS), commonly known as petrol, could rise to as high as N2,000 per litre if current economic pressures persist.

The union also proposed a new subsidy framework aimed at strengthening local refining capacity as a way to cushion Nigerians against rising fuel costs.

Rising Global Oil Pressures and Exchange Rate Impact

Speaking during a press briefing in Abuja on Thursday, TUC President Festus Osifo said Nigeria’s fuel pricing trajectory is being shaped by global and domestic economic shocks.

He explained that volatility in global crude oil markets, partly driven by geopolitical tensions involving the United States, Israel, and Iran, has disrupted supply expectations and pushed crude prices higher.

According to him, this has a direct effect on domestic fuel pricing, especially in a deregulated market environment.

Naira Depreciation Worsening Fuel Costs

Osifo also linked rising petrol prices to the continued depreciation of the naira, noting that exchange rate instability significantly increases the cost of imported energy inputs and transportation.

He warned that the combined effect of currency weakness and global oil price fluctuations is intensifying inflationary pressure and reducing the purchasing power of Nigerian workers.

Proposal for Local Refining-Backed Subsidy Model

To address the escalating cost burden, the TUC proposed a targeted subsidy mechanism focused on supporting domestic refining operations.

Osifo suggested that when global oil prices exceed the 2024 budget benchmark of $64.85 per barrel, excess crude revenue should be redirected to stabilise local fuel supply.

He explained that about 60 percent of the windfall revenue typically shared among the federal, state, and local governments should instead be channelled into supporting domestic refineries.

This includes major facilities such as the Dangote Refinery as well as modular refineries operating across the country.

Aim to Stabilise Domestic Fuel Prices

According to the labour union, the proposed model is intended to reduce Nigeria’s exposure to global oil shocks while strengthening domestic energy production capacity.

By cushioning local refiners, the TUC believes Nigeria can achieve more stable fuel pricing and reduce the likelihood of sudden pump price increases.

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Nigeria’s electricity sector is facing renewed pressure as mounting debts owed by Generation Companies (GenCos) to gas suppliers disrupt fuel supply, triggering widespread grid instability and persistent blackouts.

Industry players say the core issue is unpaid obligations across the value chain, with GenCos struggling to meet payment demands from gas producers.

According to the , liquidity challenges remain unresolved, despite ongoing government interventions.

A GenCo executive noted that a significant portion of revenue goes directly to gas suppliers, leaving operators financially strained.

Heavy dependence on gas worsens situation

Nigeria’s power generation relies heavily on gas-fired plants, which account for over 70% of electricity output.

This dependence makes the sector highly vulnerable to supply disruptions, especially when payments to gas suppliers are delayed.

Forex challenges adding pressure

Operators also face foreign exchange constraints, as gas is priced in dollars while revenues are earned in naira.

The gap between official and parallel market exchange rates has created additional losses for power producers, further weakening their ability to sustain operations.

Grid instability and economic impact

Data from the shows that fluctuations in power generation are closely linked to inconsistent gas supply.

This has led to:

• Frequent voltage drops
• Power plant shutdowns
• Reduced electricity output nationwide

Businesses are already feeling the impact. A manufacturer in reported reduced production capacity and rising operational costs due to unreliable power supply.

Infrastructure and security risks

Beyond financial issues, pipeline vandalism and crude theft in the continue to disrupt gas flows, worsening supply challenges and exposing the grid to further instability.

Government interventions yet to yield results

The has introduced several measures to stabilise the sector, including:

• Approval of ₦185 billion to settle debts owed to gas producers
• Plans for a ₦4 trillion bond to clear arrears in the power sector

However, experts warn that these efforts may not be sufficient without deeper structural reforms.

Experts call for urgent reforms

Energy analysts stress the need for:

• Cost-reflective electricity tariffs
• Improved payment systems across the value chain
• Better access to foreign exchange
• Enhanced infrastructure security

Without comprehensive reforms, stakeholders warn that Nigeria’s electricity crisis could persist, threatening economic growth and industrial productivity.

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Nigeria’s electricity sector is facing renewed pressure after fresh data revealed that only a handful of power plants are currently generating electricity for the national grid.

Latest operational figures released by the Nigerian Independent System Operator show that most power stations connected to the country’s transmission network were offline as of Friday afternoon.

The data indicates that out of more than 30 power plants linked to the national grid, only eight were producing electricity, while the rest recorded zero output.

This development highlights the persistent instability in Nigeria’s electricity supply chain, which continues to struggle with inadequate generation capacity, fuel supply challenges, and infrastructure limitations.

Generation Drops to Just Over 1,200MW

Operational checks on the system operator’s portal around 13:00 hours showed that the eight active plants generated a combined total of approximately 1,212 megawatts (MW).

Hydropower facilities accounted for the largest share of electricity production during the period.

The Kainji Hydroelectric Power Station generated about 425MW, while Zungeru Hydroelectric Power Station contributed roughly 299MW to the grid.

Similarly, the Shiroro Hydroelectric Power Station supplied around 274MW, reinforcing the heavy reliance on hydropower generation during periods when gas-fired plants are underperforming.

Together, the three hydro facilities accounted for the bulk of electricity available on the national grid.

Gas Plants Record Weak Output

Gas-fired plants, which traditionally provide a major portion of Nigeria’s electricity supply, delivered relatively low generation levels during the reporting period.

Among them, Paras Energy generated about 103MW, while Omoku Power Plant and Olorunsogo Power Plant produced roughly 31.5MW each.

The Omotosho Power Plant added about 31.2MW to the grid.

However, several major thermal stations recorded zero electricity generation, further worsening supply constraints.

These include the Egbin Power Station, Azura‑Edo Power Plant, Delta Power Station, Geregu Power Plant, Ibom Power Plant, and Okpai Power Plant.

Several facilities under the National Integrated Power Project (NIPP) programme also recorded no generation during the period.

Structural Challenges in the Electricity Sector

Industry analysts say the persistent shutdown of power plants reflects deep structural and operational challenges within Nigeria’s electricity sector.

According to system operators, the outages affecting thermal and gas-powered plants are linked to several factors including:

• disruptions in natural gas supply

• maintenance shutdowns

• transmission bottlenecks

• financial constraints affecting generation companies

The Nigerian grid also suffers from weak infrastructure and limited investment in generation and transmission capacity.

Demand Far Above Available Supply

Nigeria’s electricity demand has continued to grow due to population expansion, urbanisation and increasing industrial activities.

Energy experts estimate that the country requires more than 20,000MW of electricity to meet national demand effectively.

However, the grid typically supplies between 3,000MW and 5,000MW under normal operating conditions.

When generation levels fall below 1,500MW, analysts warn that the country faces a high risk of large-scale load shedding and widespread blackouts across multiple states.

Gas Supply Disruptions Worsen Crisis

The recent drop in generation has also been linked to disruptions in gas supply to thermal power plants.

Earlier this year, the Nigerian National Petroleum Company Limited announced a temporary decline in gas deliveries to several power plants due to scheduled maintenance operations carried out by its joint-venture partner Seplat Energy.

The maintenance exercise, which took place between February 12 and February 15, affected fuel supply to several electricity generation companies.

Since gas-fired plants account for a large portion of Nigeria’s electricity production capacity, any disruption in supply significantly reduces generation output.

Stakeholders Call for Urgent Reforms

Energy sector stakeholders have repeatedly called for urgent reforms to stabilise Nigeria’s electricity market.

Experts say long-term solutions must include:

• improved gas supply agreements

• stronger investment in generation infrastructure

• cost-reflective electricity tariffs

• better revenue collection across the power value chain

The government is also pursuing broader energy reforms, including a new gas development strategy aimed at boosting domestic production.

Recently, the NNPC Limited unveiled its Gas Master Plan 2026, which targets 10 billion cubic feet of gas production per day to support industrial growth and strengthen Nigeria’s energy security.

However, analysts warn that without coordinated improvements across generation, transmission and distribution networks, the national grid may continue to face frequent disruptions.

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The Federal Government has approved a 15% tariff on imported petrol. The policy is intended to support local refineries and reduce dependence on imported fuel. The tariff will take effect after a 30-day transition period ending in November 2025.

Petrol marketers warn that this move could push the petrol price in Nigeria above N1,000 per litre. This is because fuel already sells around N900 to N920 in several parts of the country. They also fear that the policy may help large refineries, such as Dangote, gain more control of the market.

The government says the tariff will help protect domestic refining and stabilise the long-term fuel market. Officials also claim it will reduce pressure on the naira by lowering foreign exchange demand.

Analysts, however, caution that if local refineries fail to meet national demand, the result could be higher pump prices and possible scarcity. The success of the policy will depend on how quickly domestic fuel production increases.

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