By Charles Pemu 
The Nigerian National Petroleum Company Limited (NNPCL) has accumulated N318.05 billion between January and August 2025 for frontier oil exploration. This figure, obtained from documents of the September 2025 Federation Account Allocation Committee (FAAC) meeting, represents a statutory deduction of 30% of profits from Production Sharing Contracts (PSCs), as mandated by the Petroleum Industry Act (PIA) 2021.
The funds are allocated to explore under-explored basins such as the Anambra, Bida, Dahomey, Sokoto, Chad, and Benue troughs. This steady accumulation has occurred despite a shortfall in budgeted PSC profits for the year. The same automatic 30% deduction also applies to NNPCL’s management fees, bringing the total amount the company has received to N636.1 billion for exploration and management.
Government and Experts Raise Concerns
The substantial deductions, which have left the Federation Account with a significant revenue shortfall, have prompted a special subcommittee to be set up by FAAC to examine the issue. The committee has directed NNPCL to provide detailed financial records of its exploration projects.
President Bola Tinubu has also ordered a review of these deductions, stating that the move is part of his administration’s efforts to boost public savings and enhance spending efficiency. The Director-General of the Budget Office of the Federation, Tanimu Yakubu, has stated that Nigeria has lost nearly 60% of its gross oil revenue to the PIA’s provisions, which allocate 30% each to NNPCL’s management fees and the Frontier Exploration Fund. He has even initiated moves to amend the PIA to recover some of this lost revenue.
Energy experts have also weighed in on the matter. Ademola Adigun, CEO of AHA Strategies, has called the 30% allocation “unrealistic and too high,” suggesting it should be cut to a maximum of 10%. However, Professor Dayo Ayoade, an energy law scholar, has cautioned against a hasty amendment of the PIA, which took years to pass, but agreed that the 30% deduction is too high and that NNPCL should provide a detailed account of the funds. Ayoade also argued that exploration should be handled by the private sector with tax incentives rather than through government funding via the NNPCL. Sources