The Nigerian National Petroleum Company Limited (NNPCL) has secured N318.05bn between January and August 2025 to fund frontier oil exploration, according to Federation Account Allocation Committee documents obtained.
The deductions, representing 30 per cent of Production Sharing Contract profits, are automatically channelled monthly into the Frontier Exploration Fund, created under the Petroleum Industry Act 2021. The fund supports oil search in inland basins such as Anambra, Bida, Dahomey, Sokoto, Chad and Benue.
Regulations mandate the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to manage the fund through an escrow account and issue an annual exploration and development plan. In July, the NUPRC unveiled its 2025 plan, including seismic surveys, stress-field detection, and new drilling operations across several basins.
The FAAC documents showed that while PSC profits reached N1.06tn in eight months, this was below the N1.58tn budgeted, creating a shortfall of N518.76bn. Despite the gap, the 30 per cent deduction for exploration was applied consistently, resulting in a volatile funding stream that ranged from N6.83bn in June to N78.94bn in August.
Further scrutiny has followed the deductions. A FAAC subcommittee requested NNPCL to provide detailed financial records of exploration projects before and after the PIA came into effect. The firm was directed to submit the information by September 19, 2025, though the assignment remains incomplete.
Budget Office Director-General Tanimu Yakubu earlier disclosed that Nigeria has lost nearly 60 per cent of gross oil revenue to deductions under the PIA. He warned that without adjustments, funding public expenditure will remain constrained. “Once the Act came into effect without new revenue sources to replace the loss, we lost a sizable part of what used to fund 80 per cent of public expenditure,” he said.
Industry experts have also raised concerns. Oil and gas consultant Ademola Adigun faulted the 30 per cent allocation, calling it excessive. “The money allocation is unrealistic, too high. It is not well used now,” he said, recommending that the share be cut to a maximum of 10 per cent.
However, energy law scholar Professor Dayo Ayoade urged caution, warning against amending the PIA hastily. “It took us 19 years of reform to agree on the PIA, and the PIA is actually a delicate balance of a lot of compromises,” he explained.
President Bola Tinubu has directed a review of deductions and revenue retention by major agencies, including NNPCL, as part of broader reforms to strengthen fiscal stability and restore policy credibility.
