The Federal Government has reported a significant shortfall in its oil earnings for the first quarter of 2025, missing its revenue target by a staggering 64 per cent. This development has resulted in a substantial fiscal deficit for the period, according to the official budget implementation report.
Massive Revenue Shortfall and Fiscal Deficit
Official data released by the Budget Office of the Federation on December 24, 2025, shows the government's actual gross oil revenue for Q1 2025 stood at N4.55 trillion. This figure represents a colossal N8.21 trillion shortfall, or 64.35 per cent, when measured against the prorated quarterly budget estimate of N12.76 trillion.
Consequently, the government incurred a fiscal deficit of N3.04 trillion during the three-month period. While this deficit was N481.81 billion (13.67 per cent) lower than the projected N3.53 trillion, it underscores the severe pressure on public finances caused by the revenue underperformance.
Breakdown of Oil and Non-Oil Revenue Performance
A detailed analysis of the Q1 2025 Budget Implementation Report (BIR) reveals a mixed performance across different revenue streams. On the oil side, the actual net oil revenue that accrued to the federation account was N3.91 trillion. This was N6.97 trillion (64.05 per cent) below the prorated target of N10.88 trillion.
Major oil revenue items that fell severely below target included:
- Crude oil and gas sales at N438.54 billion, missing its target by 62.78%.
- Petroleum profit tax and gas tax at N1.81 trillion, a 76.89% shortfall.
- Royalties from oil and gas at N1.91 trillion, 44.19% below projection.
However, some minor revenue lines exceeded expectations. Concessional rentals and pipeline fees outperformed their budgets by over 1,300% and 156% respectively. Notably, gas flared penalties and exchange gains, which had zero budget projection, brought in N124.87 billion and N9.57 billion.
On the non-oil front, the government generated N4.39 trillion in gross revenue. This was N1.66 trillion (27.45 per cent) less than the N6.05 trillion estimate. Value-Added Tax (VAT) and the Electronic Money Transfer Levy (EMTL) were the bright spots, exceeding their quarterly projections.
Causes, Comparisons, and Context
The report attributed the dismal net oil revenue performance to several key factors: lower-than-projected crude oil revenue, a fall in production and lifting volumes, and poor industry investments in the recent past. These issues also led to higher-than-prorated deductions for oil and gas.
The government had based its budget on a benchmark oil price of $75 per barrel and a daily production level of 2.06 million barrels. The actual outturn suggests these assumptions were not met.
Despite the bleak picture compared to the 2025 budget, there was some year-on-year improvement. The Q1 2025 gross oil revenue of N4.55 trillion was N1.2 trillion (35.82 per cent) higher than the N3.35 trillion generated in the same period of 2024. Similarly, net oil revenue showed growth compared to both Q4 2024 and Q1 2024 figures.
For non-oil revenue, the report noted that the underperformance of some items was linked to lower-than-projected GDP growth. However, most non-oil revenue streams still performed better than they did in the first quarter of 2024, aided by recovering domestic economic activities and government measures.
The extension of the 2024 capital budget implementation and improved efficiency from revenue-generating agencies were also cited as positive factors supporting non-oil revenue collection.
