Nigeria lost N16.2 trillion in oil revenue in the first half of 2025, reflecting a shortfall from the government’s revenue targets for that period.
According to a report released by the Budget Office on budget performance, N9.32 trillion was generated out of the 25.52 trillion projected for January to June 2025. This means only 36.52 per cent of the projected oil revenue target was earned while recording a shortfall of 63.49 per cent during the period.
The massive gap between budget projections and actual earnings has been attributed to a couple of interconnected factors, including low production (caused by crude oil theft, pipeline vandalism, and underinvestment), lower oil prices, and underperformance of major revenue streams.
According to the Budget Office report, the budget had a target of 2.12 million barrels of oil per day (mbpd) in production, but actual production averaged only 1.68 mbpd during the first half of the year.
The budget assumed an oil price of $75 per barrel. In the second quarter, the average price was around $74 per barrel, which contributed to the lower revenue in H1 2025.
The report read, “Gross oil revenue amounting to N9.32tn was collected in the first half of 2025 as against the N25.52tn prorate budget projection for the period. This denotes a decrease of N16.20tn (63.49 per cent) from the 2025 half-year budget estimate,” the report stated.
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The report shows that crude oil revenue stood at N4.55 trillion in the first quarter against N12.76 trillion projected. It, however, increased marginally to N4.77 trillion in the second quarter, recording a shortfall of N7.99 trillion.
It indicated that crude oil output increased marginally in the second quarter by 0.08mbpd from 1.6mbpd in the first quarter of 2025 and 0.27mbpd over the 1.41mbpd produced in the same period of 2024.
The report further noted that while revenue fell far short of the 2025 budget, it was 42.59 per cent (N2.78 trillion) higher than in the first half of 2024.
This suggests that while reforms and security measures are slowly increasing output, they are not yet sufficient to meet the government’s aggressive spending plans.
Crude oil has remained Nigeria’s major source of foreign exchange earnings. The largest sources of government oil income, including Petroleum Profit Tax (PPT) and royalties, missed their targets by over 70 per cent and 48 per cent, respectively.
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According to the report, crude oil and gas sales yielded N712.57 billion, falling short of the N2.36 trillion objective by N1.64 trillion (69.76 per cent). Petroleum Profit and Gas Taxes generated N4.16 trillion, falling short of the projected N15.69 trillion by N11.53 trillion (73.47 per cent).
Similarly, oil and gas royalties were N3.53 trillion, N3.33 trillion lower than the N6.86 trillion prediction (48.54 per cent), while incidental oil revenue, including royalty recoveries and marginal field licences, came in at N438.90 billion, N152.87 billion below the N591.76 billion projection.
Impact of Oil Revenue Shortfall
Economic experts have warned that, as crude oil revenue is the major source of foreign exchange earnings, a shortfall could lead to a wider budget deficit, forcing the government to rely more on borrowing to finance the N54.9 trillion budget.
Non-oil side growth
The report revealed that N4.46 trillion was recorded as gross revenue from the non-oil side, reflecting an increase of N404.26 billion (6.68 per cent) above projection.
The report also showed that after deductions, the net distributable revenue available to the three tiers of government (federal, state and LGAs) stood at N9.85 trillion, representing a shortfall of N7.01 trillion (41.58 per cent).
It notes that Nigeria’s oil sector continues to face long-standing challenges such as recurrent crude oil theft, pipeline vandalism, and inadequate security, all of which have contributed to production shortfalls and supply interruptions. It stated that underinvestment in contemporary technology and infrastructure, corruption and regulatory uncertainty, as well as the country’s reliance on crude oil exports, have all contributed to exposing public finances to market volatility.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in mass communication.
