Nigeria is experiencing a sharp decline in oil export revenues despite ongoing fiscal reforms by the government, threatening the deployment of infrastructure projects across critical sectors.
The World Bank’s Nigeria Economic Update, released in April 2025, forecasted that declining oil prices would negatively impact Nigerian growth in 2025 and 2026, directly affecting the government’s capacity to fund priority spending.
In a bid to address the situation, the government introduced a policy in February 2026 requiring centralization of oil and gas revenues to improve control over financial flows between Nigerian National Petroleum Company Limited and the public treasury. However, the effects of this measure remain absent from current data.
Amid Middle East tensions, Nigeria’s public finances are under pressure from a challenging oil market. Oil and gas tax revenues fell below their 17.4 trillion naira ($9.1 billion) target during the first three quarters of fiscal year 2025, according to Federation Budget Office data.
Petroleum profit tax and gas levies suffered the most significant shortfall, generating 6.14 trillion naira ($3.2 billion) against a target of 23.54 trillion naira ($12.3 billion).
Crude oil and gas sales yielded 1.33 trillion naira ($697 million), below the projected 3.53 trillion naira ($1.85 billion). Oil and gas royalties totaled 5.54 trillion naira ($2.9 billion), far below the 10.3 trillion naira ($5.4 billion) target. Ancillary petroleum revenues reached only 475.9 billion naira ($249 million), against an expected 887.65 billion naira ($465 million).
The Budget Office reported that crude production fell below forecasts and international oil prices were lower than anticipated. The agency also identified operational disruptions, infrastructure challenges, underinvestment in exploration and production activities, and persistent crude oil theft as contributing factors.
These outcomes reflect a gradual decline in Nigerian oil revenues spanning several years. In 2023, the Nigerian government collected $30.85 billion in oil revenues, a 13.7 per cent drop from $35.77 billion in 2022, according to the Nigeria Extractive Industries Transparency Initiative annual report published in October 2024.
The downward trend persisted in 2024. Total oil and gas revenues missed their target by 24.7 per cent, totaling 15.07 trillion naira ($7.9 billion) against a projected 19.99 trillion naira ($10.5 billion).
Production improved during the year, reaching 1.49 million barrels per day in December 2024, but lower global prices and theft-related losses continued to negatively impact revenues.
Nigeria’s reliance on oil revenues increases fiscal risks associated with these revenue shortfalls.