The Federation Account Allocation Committee (FAAC) disbursed a historic N6 trillion to Nigeria's federal, state, and local governments in the third quarter of 2025, marking the highest quarterly payout on record. This surge in shared revenue, however, comes with growing fiscal concerns as global oil prices weaken and domestic crude production shows signs of decline.
Record-Breaking Revenue and State Allocations
According to the latest Quarterly Review released by the Nigerian Extractive Industries Transparency Initiative (NEITI), the N6 trillion disbursed between July and September 2025 represents a massive 55.6% increase compared to the same period in 2024. Over a two-year span, allocations have more than doubled. The total shared across the three months of September, October, and November 2025 reached N9.62 trillion.
A detailed breakdown of the Q3 N6 trillion shows the Federal Government received N2.19 trillion, state governments got N1.97 trillion, and local government councils shared N1.45 trillion. This indicates a broad-based rise in statutory transfers across all tiers of government.
The distribution highlighted significant disparities among the 36 states. Lagos State recorded the highest receipt of N179.3 billion for the quarter, averaging N59.76 billion monthly. Kano State followed with N79.2 billion, and Rivers State came third with N78.8 billion.
At the lower end, Nasarawa State received N42.5 billion, Ebonyi got N42.9 billion, and Ekiti was allocated N43 billion. The gap between the highest (Lagos) and lowest (Nasarawa) state allocations stood at a staggering N136.8 billion for the quarter.
Oil Derivation Boosts Revenue for Producing States
The N6 trillion total included the crucial 13% derivation payments to oil-producing states, underscoring the continued dominance of oil-linked revenues in federation finances. Among these states, Delta State recorded the highest gross revenue allocation of N180.68 billion, edging out Lagos. It stood alongside Akwa Ibom, Bayelsa, and Rivers as the major beneficiaries of derivation inflows.
Reacting to the increased allocations, Delta State Governor, Sheriff Oborevwori, urged his fellow governors to utilize the funds to improve the lives of their citizens. Speaking at the groundbreaking ceremony for the N39.3 billion Otovwodo flyover project in Ughelli North, Oborevwori stated that state governments now have sufficient resources and there was no point in concealing this truth from Nigerians.
NEITI's analysis revealed the composition of the shared revenues:Statutory revenues accounted for 62%, Value Added Tax (VAT) contributed 34%, while the Electronic Money Transfer Levy (EMTL) and an augmentation from the non-oil excess revenue account each made up 2%. An extra N100 billion augmentation from the non-oil excess revenue account further boosted subnational inflows.
Mounting Fiscal Risks and Debt Obligations
Despite the record inflows, NEITI issued a strong warning about emerging fiscal pressures for the final quarter of 2025. The agency cited lower average oil prices and a slightly higher exchange rate compared to Q3 as key risk factors. More critically, average daily crude oil production declined from 1.64 million barrels per day in Q3 to 1.59 million barrels per day in the first month of Q4. NEITI cautioned that if these trends continue, they could significantly reduce foreign exchange inflows and distributable revenues.
On subnational debt, NEITI disclosed that deductions from states' allocations to service debts and other obligations totaled N225.89 billion in Q3, representing a 6.5% decline from the previous quarter. The average debt service ratio across states was 9.4%, with ratios ranging from 1.5% to 26.8%.
The data showed an improving picture for debt sustainability, with about one-third of states recording debt service ratios below 5%, and more than two-thirds remaining below 10%.
Supporting NEITI's figures, the National Bureau of Statistics (NBS), in its FAAC Allocation Reports for September to November 2025, disclosed that FAAC disbursed N3.64 trillion in September, N3.05 trillion in October, and N2.93 trillion in November. The NBS also reported that N141.39 billion was shared among oil-producing states from the 13% derivation fund, while revenue-generating agencies received costs of collection totaling N115.27 billion.
