Nigeria missed oil revenue target by 62%, recorded

By Uche Usim

Nigeria’s oil revenue performance deteriorated sharply in the third quarter of 2025 and missed budget expectations by a wide margin.

This reinforced concerns over the country’s fragile fiscal position, even as modest gains were recorded in actual receipts.

In the same vein, Nigeria’s total government expenditure fell significantly below projections in the third quarter of 2025, coming in at N8.03 trillion, 41.57 per cent short of the prorated quarterly budget estimate of N13.75 trillion.

Fresh data from the Budget Office of the Federation showed that gross oil revenue for the quarter stood at N4.87 trillion, far below the prorated quarterly projection of N12.76 trillion. This represents a shortfall of N7.88 trillion, or 61.8%, underscoring the scale of the gap between projections and reality.

The development comes at a time when the federal government is contending with mounting debt service obligations, persistent fiscal deficits, and an urgent need to strengthen revenue mobilisation, particularly from non-oil sources through ongoing tax reforms and improved collection systems.

Under the 2025 fiscal framework, the government projected gross federally collectible revenue of N78.08 trillion, with oil expected to account for N51.05 trillion, representing 65.38% of total revenue. On a prorated basis, quarterly revenue was estimated at about N19.52 trillion, highlighting the extent to which oil underperformance is weighing on overall fiscal outcomes.

Despite the sharp shortfall, oil revenue showed slight improvement compared to previous periods. The N4.87 trillion recorded in Q3 was higher than the N4.77 trillion posted in Q2 2025 and N4.62 trillion in the corresponding period of 2024. According to the Budget Office, this translates to a 2.1% quarter-on-quarter increase and a 5.41% year-on-year growth, an indication of marginal recovery in oil receipts, albeit from a weak base and still far below expectations.

A detailed breakdown of oil revenue components revealed that most major streams fell significantly short of their targets.

Crude oil and gas sales generated N622.99 billion during the quarter, compared to a projected N1.18 trillion, leaving a deficit of N555.2 billion or 47.12%. Petroleum Profit Tax and gas taxes performed even worse, yielding N1.97 trillion against a target of N7.85 trillion, a massive shortfall of N5.87 trillion, or 74.82%.

Similarly, oil and gas royalties came in at N2.01 trillion, missing the quarterly estimate of N3.43 trillion by N1.42 trillion. Incidental oil revenue, which includes royalty recoveries and marginal field licence earnings, also underperformed sharply, generating just N37 billion compared to a projected N295.88 billion.

In contrast, a handful of revenue lines outperformed expectations, offering limited relief. Concessional rentals rose significantly above projections, generating N7.89 billion against a budgeted N1.03 billion, an overperformance of 667.5%. Miscellaneous oil revenues, including pipeline fees, also exceeded estimates at N9.65 billion versus the projected N5.86 billion.

Additionally, gas flared penalties and exchange gains contributed N181.61 billion and N28.65 billion respectively, despite not being captured in the original budget projections.

The persistent underperformance highlights the structural vulnerabilities in Nigeria’s fiscal framework, which remains heavily dependent on oil revenues despite sustained policy efforts to diversify income sources. While the government has intensified non-oil revenue mobilisation through tax reforms, digitised collection platforms and broader fiscal restructuring, oil receipts continue to play a central role in financing public expenditure, servicing debt and sustaining budget implementation.

Production shortfalls have further compounded the problem. The 2025 budget was anchored on a crude oil production benchmark of 2.1 million barrels per day (mbpd), but actual output has consistently trailed this assumption.

Figures from the Nigerian Upstream Petroleum Regulatory Commission indicate that total crude oil and condensate production between January and September 2025 stood at 454.28 million barrels. This translates to an average daily production of 1.66 mbpd, well below the budget benchmark.

Nigeria has also struggled to meet its production quotas under the Organisation of the Petroleum Exporting Countries (OPEC) for several months, reflecting ongoing challenges such as oil theft, pipeline vandalism, underinvestment and operational inefficiencies in the upstream sector.

The widening gap between projected and actual oil revenue underscores the risks of continued reliance on hydrocarbons in an increasingly volatile global energy market. It also raises fresh concerns about the sustainability of Nigeria’s fiscal assumptions, especially as borrowing continues to rise to plug revenue shortfalls.

With oil still accounting for the bulk of government earnings, analysts warn that without significant improvements in production levels and a more aggressive push toward revenue diversification, Nigeria’s fiscal stability will remain exposed to recurring shocks.

Despite the shortfall against the expenditure target, spending in the period was N0.39 trillion, or 4.86 per cent, higher than the N7.64 trillion recorded in the corresponding quarter of 2024.

The report also showed that the Federal Government posted a fiscal deficit of N0.33 trillion during the quarter under review. It noted that non-debt recurrent expenditure stood at N2.66 trillion, reflecting a decline of N739.01 billion, or 21.75 per cent, below the quarterly estimate of N3.40 trillion. However, this figure was still 31.20 per cent higher than the N1.83 trillion recorded in Q3 2024.

In addition, statutory transfers amounted to N360.32 billion within the period. Overall, the fiscal deficit translated to a deficit-to-GDP ratio of 2.29 per cent, which remains within the statutory 3 per cent threshold as well as the ECOWAS convergence benchmark, indicating compliance despite elevated spending pressures and persistent implementation gaps across key budget components.