By Charles Pemu 
The credibility of Nigeria’s 2025 national budget faces a significant challenge as new data reveals a staggering 62.2% shortfall in prorated oil and gas revenue for the first seven months of the year. According to the Federal Government’s 2025–2027 Medium Term Expenditure Framework (MTEF), the wide gap between fiscal projections and actual earnings has placed renewed pressure on the nation’s liquidity and deficit financing plans.
The revenue crisis is the result of a “perfect storm” of internal production struggles and unfavorable global market conditions. While the 2025 budget anticipated a robust inflow of ₦29.78 trillion in gross oil and gas revenue for the January-to-July period, actual collections amounted to just ₦11.17 trillion. After statutory deductions, including the 13% derivation for oil-producing states, net revenue to the Federation Account stood at a mere ₦9.61 trillion, failing to reach even half of the ₦25.39 trillion target.
Crude Prices and Production Deficits Stall Growth
The fiscal misalignment is largely attributed to overly optimistic benchmarks set at the beginning of the year. The 2025 budget was anchored on a crude oil price of $75 per barrel, yet global economic headwinds and increased supply from non-OPEC nations pushed market prices below the $65 mark for much of the year. This price slump meant Nigeria earned significantly less per barrel than the Ministry of Finance had anticipated.
Compounding the price drop is the persistent failure to meet production targets. Although the government set an ambitious benchmark of 2.1 million barrels per day (mbpd), data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) confirms that actual output averaged only 1.66 mbpd between January and September. Production dipped further in September to 1.58 mbpd, highlighting the ongoing impact of oil theft, aging infrastructure, and a lack of fresh investment in the upstream sector.
Non-Oil Revenues Provide Incomplete Buffer
While oil revenues faltered, non-oil sectors showed some resilience, though not enough to stabilize the national balance sheet. Net non-oil revenue reached ₦12.14 trillion by July, trailing its target by 13%. Some specific tax categories demonstrated notable strength, with Corporate Income Tax exceeding targets by 7.6% and Value Added Tax (VAT) outperforming expectations by 10%. The Electronic Money Transfer Levy also saw a dramatic 66% surge above projections.
However, these gains were offset by a near-collapse in solid mineral receipts and underperformance in customs duties and NLNG dividends. This uneven performance underscores the difficulty of shifting the weight of Nigeria’s economy away from its traditional dependence on fossil fuels.
The revenue shortfall has dire implications for Nigeria’s fiscal health, particularly concerning the debt service-to-revenue ratio, which remains at a critical level. With oil receipts failing to meet expectations, the federal government may be forced to rely more heavily on domestic and international borrowing to fund its infrastructure projects and recurrent expenditures.
For policy stakeholders and investors, the 2025 MTEF data serves as a stark reminder of the volatility inherent in Nigeria’s current fiscal model. Financial analysts argue that future budgets must be anchored on more conservative operational realities, rather than aspirational production targets, to avoid the recurring cycle of mid-year fiscal stress.