Nigeria’s petroleum profit and gas tax revenue fell N17.4 trillion short of its three-quarter target, highlighting the growing impact of weaker crude oil production and lower international oil prices on government earnings.

This is according to data from the Budget Office of the Federation.

The figures showed that Petroleum Profit Tax and Gas Taxes recorded the largest revenue gap, while crude oil and gas sales, royalties, and other oil-related revenues also underperformed budget expectations.

The latest performance highlights the continued vulnerability of Nigeria’s public finances to fluctuations in crude oil production and global energy prices despite ongoing efforts to strengthen revenue generation.

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What the data is saying

Budget Office data showed that several key oil revenue sources recorded substantial shortfalls during the review period.

  • Petroleum Profit Tax and Gas Taxes generated N6.14 trillion against a projected N23.54 trillion, resulting in a shortfall of N17.40 trillion or 73.92%.
  • Crude Oil and Gas Sales contributed N1.33 trillion, compared with a budget target of N3.53 trillion, creating a deficit of N2.20 trillion.
  • Oil and Gas Royalties stood at N5.54 trillion against a projected N10.30 trillion, representing a shortfall of N4.75 trillion.
  • Incidental Oil Revenue amounted to N475.90 billion, falling N411.74 billion below the projected N887.65 billion.

The cumulative deficits across these major revenue streams underscore the challenges facing the government’s fiscal projections and budget implementation plans.

More Insights

Despite the broad weakness in oil revenue collections, some petroleum-related income sources exceeded expectations and provided limited support to government earnings.

  • Concessional Rentals generated N32.72 billion, surpassing the projected N15.07 billion.
  • Miscellaneous Oil Revenue reached N39.38 billion, exceeding its target of N15.02 billion.
  • Gas Flared Penalties contributed N448.86 billion despite having no budget projection for the period.
  • Exchange Gains generated N176.96 billion, also without an initial budget estimate.

According to the Budget Office, the disappointing overall performance was largely driven by lower-than-expected crude oil production and weaker international oil prices.

The report noted that operational disruptions, infrastructure challenges, underinvestment in upstream activities, and crude oil theft continued to weigh on production levels, while softer global oil prices reduced export earnings and government revenue.

What you should know

Nigeria has intensified efforts to improve oil sector performance and reduce the economy’s dependence on crude oil revenues.

  • The Federal Government continues to implement measures aimed at increasing crude oil production and tackling oil theft.
  • Reforms in the oil and gas sector are expected to improve operational efficiency and attract new investments.