By Ayomide Otitoju
The Nigerian National Petroleum Company Limited (NNPCL) received ₦318.05 billion between January and August 2025 for frontier oil exploration, even as concerns mount over declining oil revenues and widening budget gaps.
Documents from the September Federation Account Allocation Committee (FAAC) meeting showed the funds were monthly deductions representing 30% of Production Sharing Contract (PSC) profits, as mandated by the Petroleum Industry Act (PIA) 2021. The Act established the Frontier Exploration Fund to finance oil searches in under-explored basins, including Anambra, Bida, Dahomey, Sokoto, Chad, and Benue.
In July, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) launched a Frontier Basin Exploration and Development Plan, outlining seismic surveys, drilling, and well reappraisals to guide further exploration and reduce risks.
FAAC figures revealed wide fluctuations in monthly allocations to the fund: ₦31.77 billion in January, ₦38.3 billion in February, ₦61.49 billion in March, ₦36.58 billion in April, ₦38.8 billion in May, ₦6.83 billion in June (the lowest), ₦25.34 billion in July, and ₦78.94 billion in August (the highest). Cumulative deductions reached ₦318.05 billion in eight months.
Applying the same 30% rule, NNPCL also received ₦318.05 billion in management fees, bringing its total receipts to ₦636.1 billion within the period.
Meanwhile, PSC profits stood at ₦1.06 trillion, falling short of the ₦1.58 trillion budgeted, leaving a ₦518.76 billion deficit. The Federation Account, which takes 40% of PSC profits, earned just ₦424 billion year-to-date, below the ₦631.5 billion target.
The revenue shortfalls have triggered transparency concerns, with FAAC subcommittees demanding detailed records of NNPCL’s frontier exploration spending. Budget Office Director-General, Tanimu Yakubu, recently warned that Nigeria has lost nearly 60% of gross oil revenue to statutory deductions under the PIA. He confirmed moves to amend the law to recover lost revenues.
President Bola Tinubu has also ordered a review of deductions by major revenue agencies, including NNPCL, Customs, FIRS, and NUPRC, to boost savings and free up funds for growth.
Energy experts remain divided on the matter. Analyst Ademola Adigun described the 30% frontier allocation as “unrealistic and too high,” suggesting it be capped at 10%. But Professor Dayo Ayoade, an energy law scholar at the University of Lagos, cautioned against hasty amendments to the PIA, arguing that the law was the product of nearly two decades of negotiations. He recommended opening frontier exploration to private investors with tax incentives, rather than relying on public funding.
Meanwhile, oil workers’ unions PENGASSAN and NUPENG have rejected proposals to strip NNPCL of oil and gas management, warning that such a move could destabilise the sector and threaten workers’ welfare.
