Nigeria’s oil revenue performance fell significantly below budget expectations in the third quarter of 2025, highlighting the country’s persistent fiscal vulnerability despite modest improvements in actual oil receipts.
According to the latest Fiscal Performance Report released by the Budget Office of the Federation, gross oil revenue stood at N4.87 trillion during the quarter, representing a shortfall of N7.88 trillion or 61.8 per cent below the quarterly budget projection.
The figure was far below the prorated quarterly gross oil revenue target of N12.76 trillion contained in the 2025 fiscal framework.
The weak oil revenue performance comes amid rising debt service obligations, persistent fiscal deficits and ongoing efforts by the Federal Government to strengthen non-oil revenue generation through tax reforms and improved collections.
The Budget Office disclosed that Nigeria’s 2025 fiscal framework projected gross federally collectable revenue of N78.08 trillion, with oil revenue expected to contribute N51.05 trillion, representing 65.38 per cent of total projected revenue.
Based on the framework, prorated quarterly revenue expectations for 2025 stood at approximately N19.52 trillion.
The report stated: “Gross oil revenue generated in Q3 2025 amounted to N4.87 trillion, falling short of the quarterly projection by N7.88 trillion.”
Despite the shortfall, the report showed that oil revenue increased slightly from N4.77 trillion recorded in Q2 2025 and N4.62 trillion generated in the corresponding period of 2024.
The Budget Office noted that actual oil revenue recorded a 2.1 per cent quarter-on-quarter increase and a 5.41 per cent year-on-year growth, reflecting modest improvements in oil receipts despite continued underperformance relative to fiscal expectations.
A breakdown of the oil revenue components showed that several major revenue lines recorded significant shortfalls against budget targets during the quarter.
Crude Oil and Gas Sales generated N622.99 billion, falling below the projected N1.18 trillion by N555.2 billion, representing a 47.12 per cent shortfall.
Petroleum Profit Tax and Gas Taxes generated N1.97 trillion against a projected N7.85 trillion, resulting in a deficit of N5.87 trillion or 74.82 per cent below target.
Similarly, Royalties from Oil and Gas stood at N2.01 trillion, missing the quarterly estimate of N3.43 trillion by N1.42 trillion.
Incidental Oil Revenue, which includes royalty recovery and marginal field licence earnings, also underperformed significantly, generating only N37 billion compared to the projected N295.88 billion.
However, some oil-related revenue streams exceeded expectations during the period.
Concessional Rentals generated N7.89 billion against a projected N1.03 billion, surpassing estimates by 667.5 per cent.
Miscellaneous oil revenue items, including pipeline fees, generated N9.65 billion compared to the projected N5.86 billion.
Gas Flared Penalty and Exchange Gain revenues also generated N181.61 billion and N28.65 billion respectively, despite having no budget projections.
The report underscores Nigeria’s continued dependence on oil revenue despite efforts by the Federal Government to diversify earnings and reduce exposure to volatility in global oil markets.
The government has intensified non-oil revenue mobilisation through tax reforms, digital collection systems and broader fiscal restructuring initiatives.
However, oil revenue continues to play a critical role in financing government expenditure, debt servicing obligations and budget implementation.
Nigeria has also consistently fallen short of OPEC production quotas for several months in 2025.
The Federal Government had set a crude oil production benchmark of 2.1 million barrels per day (mbpd) in the 2025 budget.
However, figures released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that a total of 454.28 million barrels of crude oil and condensate were produced between January and September 2025.
This translates to an average daily production of 1.66 mbpd, significantly below the budget benchmark of 2.1 mbpd.
Boluwatife Enome
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