Nigeria’s 2025 federal budget has suffered a significant setback as oil and gas revenues fell 62.2% below the prorated target for the first seven months of the year. According to the Federal Government’s 2025–2027 Medium Term Expenditure Framework (MTEF), this shortfall reflects both weaker global crude prices and lower-than-expected domestic production, highlighting the ongoing fiscal vulnerability of Nigeria’s oil-dependent economy.
The 2025 budget had projected N51.04 trillion in gross oil revenue, with a prorated target of N29.78 trillion from January to July. However, actual gross collections amounted to only N11.17 trillion, representing just 37.5% of the expected inflow. After statutory deductions, net revenue to the Federation Account reached N9.61 trillion, leaving a net shortfall of N15.78 trillion, or 62.2%, far below budget assumptions.
The revenue gap has been worsened by international market conditions. While the budget was based on a crude oil price of $75 per barrel, global prices have largely traded below $65 in 2025 due to economic headwinds, increased non-OPEC supply, and sluggish demand growth. The decline in oil prices amplified the fiscal impact of lower production, placing further strain on both federal and subnational budgets.
Production volumes also fell short of expectations. The 2025 budget assumed crude oil production of 2.1 million barrels per day (mbpd), but data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed an average of 1.66 mbpd between January and September. In September alone, output dropped to 1.58 mbpd, with crude accounting for 1.39 mbpd and condensates 0.19 mbpd. This continued gap between projected and actual production highlights operational challenges in the oil sector, including underinvestment, pipeline vandalism, and oil theft.
Non-oil revenue offered only partial relief. Net non-oil revenue reached N12.14 trillion by July, falling 13% short of its prorated target despite gains from corporate income tax, VAT, and the electronic money transfer levy. Underperformance in customs duties, solid minerals, and NLNG dividends meant the total non-oil buffer was insufficient to offset the massive oil revenue shortfall. The MTEF figures underscore the urgent need for Nigeria to recalibrate its fiscal expectations and accelerate reforms to strengthen non-oil revenue sources.
source: nairametrics