The Nigerian National Petroleum Company Limited (NNPCL) has received a total of N318.05bn between January and August 2025 for frontier oil exploration, according to Federation Account Allocation Committee (FAAC) documents obtained by The PUNCH.
The deductions, representing 30 per cent of Production Sharing Contract (PSC) profits, are automatically set aside monthly for exploration across inland basins, as provided under the Petroleum Industry Act (PIA) 2021. The targeted basins include Anambra, Bida, Dahomey, Sokoto, Chad, and Benue.
Findings showed that PSC profits in the eight-month period amounted to N1.06tn, below the budgeted N1.58tn, creating a shortfall of N518.76bn. Despite the revenue gap, the statutory 30 per cent deductions were consistently applied, accumulating N318.05bn for exploration.
The deductions fluctuated monthly, from as low as N6.83bn in June to as high as N78.94bn in August, reflecting volatility in PSC earnings. The same 30 per cent was also allocated to NNPCL’s management fees, bringing the company’s total receipts for exploration and fees to N636.1bn within the eight months.
Meanwhile, the Federation Account, entitled to 40 per cent of PSC profits, received N424.07bn year-to-date, well below the budgeted N631.57bn.
The deductions have raised concerns among stakeholders. At a recent FAAC meeting, members demanded greater transparency from NNPCL and directed it to provide detailed records of frontier exploration projects before and after the PIA.
Budget Office Director-General Tanimu Yakubu warned earlier that Nigeria had lost nearly 60 per cent of gross oil revenue to PIA deductions, stressing the need for legislative amendments. President Bola Tinubu has also ordered a review of revenue retention practices by major agencies, including NNPCL.
While some industry experts, such as Mr Ademola Adigun, criticised the 30 per cent frontier allocation as “unrealistic and too high,” others like Prof. Dayo Ayoade of the University of Lagos cautioned against hasty amendments to the PIA, urging detailed accountability from NNPCL instead.
