Uche a Cecil Izuora
Despite ongoing fiscal reforms by Government, revenue returns from oil export in Nigeria is falling drastically threatening infrastructure projects deployment across critical sectors.
The World Bank’s Nigeria Economic Update, published in April 2025, predicted that falling oil prices would weigh on Nigerian growth in 2025 and 2026, with a direct impact on the government’s ability to fund priority spending.
In an attempt to correct course, the government in February 2026 introduced a policy requiring the centralization of oil and gas revenues to better control financial flows between Nigerian National Petroleum Company Limited (NNPCL) and the public treasury.
The effects of the measure are not yet visible in the data for the period under review.
Under current situation amid Middle East tensions, Nigeria’s public finances are feeling the strain of a difficult oil market.
Oil and gas tax revenues fell short of their 17.4 trillion naira ($9.1 billion) target over the first three quarters of fiscal year 2025, according to data from the Federation Budget Office.
The hardest-hit line item was petroleum profit tax and gas levies, which generated 6.14 trillion naira ($3.2 billion) against a target of 23.54 trillion naira ($12.3 billion).
Other revenue lines also posted significant gaps.
Crude oil and gas sales brought in 1.33 trillion naira ($697 million), against a projected 3.53 trillion naira ($1.85 billion). Oil and gas royalties came in at 5.54 trillion naira ($2.9 billion), well below the 10.3 trillion naira ($5.4 billion) target.
Ancillary petroleum revenues reached only 475.9 billion naira ($249 million), against an expected 887.65 billion naira ($465 million).
The Budget Office said crude production fell short of forecasts and international oil prices were lower than expected.
The agency also cited operational disruptions, infrastructure challenges, underinvestment in exploration and production activities, and persistent crude oil theft as aggravating factors.
These results are part of a gradual deterioration in Nigerian oil revenues over several years.
In 2023, the Nigerian government collected only $30.85 billion in oil revenues, down 13.7 per cent from $35.77 billion in 2022, according to the annual report of the Nigeria Extractive Industries Transparency Initiative (NEITI), published in October 2024.
The trend continued in 2024. Total oil and gas revenues missed their target by 24.7 per cent, coming in at 15.07 trillion naira ($7.9 billion) against a projected 19.99 trillion naira ($10.5 billion).
Production nonetheless improved over the year, reaching 1.49 million barrels per day in December 2024, but lower global prices and theft-related losses continued to weigh on revenues.
Nigeria’s dependence on oil revenues heightens the fiscal risks associated with these shortfalls.