Nigeria’s oil revenue experienced a dramatic decline in 2025 as the Nigerian National Petroleum Company (NNPC) delivered only N604.61 billion to the Federation Account Allocation Committee (FAAC), far short of the N4.20 trillion budgeted, according to federal allocation data reviewed by Agora Policy. The shortfall, representing an 86 percent drop, highlights the fragility of an economy still heavily reliant on oil revenue.
The anticipated N3.25 trillion interim dividend, which was factored into government spending plans, failed to materialize, compounding the fiscal crisis. “When your largest revenue contributor misses targets by this magnitude, every aspect of government function, from infrastructure to healthcare, faces existential funding gaps,” said Chinedu Uzordike, a senior energy analyst at Sofidam Capital.
Monthly production data from NNPC reveal a volatile year, with profit peaking in August and September at N263 billion and N275 billion respectively, only to collapse in the final quarter—December delivered just N26.82 billion, barely 14 percent of the monthly target. Analysts point to pipeline vandalism, crude theft in the Niger Delta, ageing infrastructure, and regulatory uncertainty as major factors undermining stable production.
The revenue collapse has immediate implications for Nigeria’s federal structure, which distributes oil revenue to states and local governments. Many states, heavily dependent on federal allocations, are now facing cash shortages affecting salaries, infrastructure projects, and basic service delivery. For President Bola Tinubu’s administration, the situation intensifies the challenge of pursuing economic reforms and stabilizing public finances despite recent subsidy removals and tax reforms.
NNPC’s struggles contrast sharply with international oil companies operating in Nigeria, which continue to meet production targets despite security and operational challenges. With oil revenue still accounting for roughly 50 percent of government income, experts warn that without urgent reforms and investment in production infrastructure, Nigeria’s fiscal and economic stability could remain under serious threat.
source: Business day