Nigeria’s gross oil revenue significantly underperformed its 2025 budget projections in the first half of the year, raising fresh concerns about fiscal sustainability and the government’s ability to fund planned expenditures, according to official data from the Budget Office of the Federation.
Figures contained in the Q1 and Q2 2025 Budget Implementation Reports show that total gross oil revenue collected between January and June stood at ₦9.32 trillion, far below the prorated budget projection of ₦25.52 trillion for the period.
This represents a shortfall of approximately ₦16.20 trillion, or 63.49 percent.
In the first quarter of 2025, actual gross oil receipts amounted to ₦4.55 trillion, missing the quarterly target of ₦12.76 trillion by ₦8.21 trillion, equivalent to a 64.35 percent gap.
The trend persisted in the second quarter, when gross oil revenue of ₦4.77 trillion fell ₦7.99 trillion, or 62.62 percent, below the same quarterly projection of ₦12.76 trillion.
Despite the sharp deviation from budget expectations, the Budget Office noted that oil revenue in the first half of 2025 was higher than what was recorded in the corresponding period of 2024, indicating some year-on-year improvement even as targets were missed.
The revenue underperformance was largely attributed to production and pricing gaps. Average crude oil output in the first half of the year stood at about 1.68 million barrels per day, significantly below the budget benchmark of approximately 2.12 million barrels per day.
The lower production level directly constrained export earnings, given oil’s continued dominance as Nigeria’s primary source of foreign exchange and fiscal revenue.
Oil prices also underperformed assumptions used in the 2025 budget. Crude oil averaged around 74 dollars per barrel during part of the period, slightly below the benchmark price of 75 dollars per barrel, further limiting revenue inflows.
A breakdown of oil revenue components highlights the scale of the shortfall across major streams.
Crude oil and gas sales generated ₦712.57 billion, underperforming targets by about 69.76 percent. Petroleum profit and gas taxes yielded ₦4.16 trillion, which was 73.47 percent below projections, while oil and gas royalties came in at ₦3.53 trillion, representing a 48.54 percent shortfall.
Although miscellaneous oil revenue and concessional rentals exceeded targets, their contribution remained marginal relative to the gaps recorded in the main revenue lines.
Non-oil revenue performance was mixed during the period. In the first quarter, gross non-oil receipts stood at ₦4.71 trillion, about 22.18 percent below forecasts.
In the second quarter, non-oil revenue of ₦4.46 trillion exceeded some internal estimates but still fell short of overall budget projections.
As a result, net distributable revenue available to the federal, state, and local governments also underperformed expectations in both quarters, tightening fiscal space across all tiers of government.
The oil revenue shortfall has significant implications for budget execution.
With oil accounting for a substantial share of projected federal revenue, weaker inflows heighten pressure on borrowing to fund expenditure commitments.
It also increases reliance on alternative buffers such as foreign exchange reserves and non-oil tax collections, while raising the risk of wider fiscal deficits if targets continue to be missed.
The first-half performance underscores long-standing structural challenges in Nigeria’s oil sector, including production constraints, security issues such as oil theft and vandalism, underinvestment, and exposure to volatility in global crude markets.
It also reinforces the urgency of accelerating revenue diversification and strengthening non-oil income streams to reduce the country’s dependence on oil, a key policy objective that has remained elusive over successive budget cycles.
