Nigeria recorded a 62.2% shortfall in its prorated oil and gas revenue target for the first seven months of 2025, delivering a major blow to the credibility of the national budget.
This is according to data contained in the Federal Government’s 2025–2027 Medium Term Expenditure Framework (MTEF), which outlines key fiscal assumptions and performance indicators.
The shortfall reflects the dual impact of lower-than-budgeted crude oil production and weaker global oil prices, further underlining the fiscal risks associated with Nigeria’s dependence on oil revenue.
What the data is saying
Under the 2025 federal budget, Nigeria projected N51.04 trillion in gross oil and gas revenue for the full year.
On a prorated basis, the expected inflow for January to July stood at N29.78 trillion.
- However, actual gross collections reached only N11.17 trillion, reflecting a 37.5% performance rate and a shortfall of N18.61 trillion.
- After accounting for statutory deductions such as the 13% derivation for oil-producing states and other first-line charges, net oil and gas revenue to the Federation Account was N9.61 trillion—far below the N25.39 trillion prorated target.
- This resulted in a net shortfall of N15.78 trillion, or 62.2%.
These figures reinforce how far actual oil revenues have diverged from budget expectations, well before the year’s end.
Falling crude prices compound revenue pressure
The revenue gap occurred during a period of weaker global oil prices.
While the 2025 budget was benchmarked at $75 per barrel, actual market conditions in 2025 were less favourable as crude oil trade below $65.
- This was due to global economic headwinds, increased non-OPEC supply, and subdued demand growth.
- Although the MTEF does not disclose the precise average price realised so far, the trend of declining international oil benchmarks has meant that Nigeria earned less per barrel than anticipated.
Given the centrality of oil receipts to both federal and subnational budgets, lower prices amplified the fiscal impact of reduced production volumes, pushing the budget further off course.
Production falls well short of budget targets
The Federal Government had set a crude oil production benchmark of 2.1 million barrels per day (mbpd) in the 2025 budget. However, actual production data tells a different story.
- Figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) show 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—well below the budget assumption of 2.1 mbpd.
- Production dipped further in September 2025, when average output stood at 1.58 mbpd.
- This figure included 1.39 mbpd of crude oil and 0.19 mbpd of condensates.
- While this volume represents 93% of Nigeria’s OPEC quota of 1.5 mbpd, it remains far off the mark set in the 2025 fiscal plan.
The shortfall highlights the persistent mismatch between budget expectations and actual operational realities in Nigeria’s oil sector.
Non-oil revenue offers only partial relief
Non-oil revenue sources provided some buffer but ultimately failed to close the oil revenue gap. As of July 2025, net non-oil revenue stood at N12.14 trillion—N1.81 trillion (13%) below its prorated target.
Some non-oil revenue items performed above expectations:
- Corporate Income Tax exceeded target by 7.6%
- Value Added Tax (VAT) outperformed by 10%
- Electronic Money Transfer Levy rose 66% above projections
However, significant underperformance in customs duties, along with a near-collapse in receipts from solid minerals and NLNG dividends, dragged down total non-oil revenue performance.
Why this matter
The revenue gaps highlighted in the 2025 MTEF call into question the credibility of Nigeria’s fiscal planning and underline long-standing structural vulnerabilities.
- With oil production trailing well below budget targets and crude prices underperforming against assumptions, the federal budget faces renewed pressure.
- This has implications for deficit financing, increased borrowing, and strained liquidity across both federal and state governments.
For investors and policy stakeholders, the data points to the urgency of either aligning budget expectations more closely with operational capacity or fast-tracking reforms that can meaningfully scale non-oil revenue contributions.
What you should know
- Nigeria’s 2025 budget was based on a crude oil benchmark of $75 per barrel and a production target of 2.1 mbpd. Both assumptions have proven optimistic.
- Reports also suggest Nigeria has been struggling to find buyers for its crude.
- Nairametrics previously reported that Nigeria’s debt service-to-revenue ratio remains dangerously high, with oil underperformance worsening fiscal stress.
- Nigeria continues to grapple with oil theft, pipeline vandalism, and underinvestment, all of which limit its ability to meet production targets even within existing OPEC quotas.