NNPCL Gets ₦318bn for Frontier Oil Exploration in 8 Months Amid Revenue Shortfalls

NNPCL has gotten ₦318bn for frontier oil exploration in 8 months amid revenue shortfalls.

 

NewsOnline Nigeria reports that the Nigerian National Petroleum Company Limited (NNPCL) has received a total of ₦318.05 billion between January and August 2025 for frontier oil exploration, despite mounting concerns over dwindling oil revenues and budget shortfalls.

Documents from the September Federation Account Allocation Committee (FAAC) meeting revealed that the funds were deductions representing 30% of Production Sharing Contract (PSC) profits, automatically set aside each month under the Petroleum Industry Act (PIA) 2021.

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The PIA created the Frontier Exploration Fund, which mandates that 30% of PSC profits be channelled into oil search across under-explored basins, including Anambra, Bida, Dahomey, Sokoto, Chad, and Benue.

In July 2025, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) unveiled a Frontier Basin Exploration and Development Plan, outlining seismic surveys, drilling, and reappraisal of wells across several inland basins. The plan, signed by NUPRC Chief Executive Gbenga Komolafe, noted that outcomes would guide further exploration and de-risking of assets.

Volatile Deductions

The FAAC documents showed wide fluctuations in monthly allocations:

• January – ₦31.77bn

• February – ₦38.30bn

• March – ₦61.49bn

• April – ₦36.58bn

• May – ₦38.8bn

• June – ₦6.83bn (lowest)

• July – ₦25.34bn

• August – ₦78.94bn (highest)

This brought cumulative frontier deductions to ₦318.05bn in eight months. The same 30% rule also applied to NNPCL’s management fees, bringing the company’s total receipts to ₦636.1bn.

Meanwhile, PSC profits in the period amounted to ₦1.06tn, falling short of the ₦1.58tn budgeted, leaving a ₦518.76bn gap.

The Federation Account, which takes 40% of PSC profits, also suffered volatility, recording just ₦424bn year-to-date, below the ₦631.5bn target.

Transparency Concerns

The shortfall has raised concerns, especially as NNPCL has not remitted any dividends into the Federation Account this year, despite the statutory deductions. A FAAC subcommittee has now demanded detailed records of NNPCL’s frontier exploration spending.

Budget Office DG, Tanimu Yakubu, recently warned that Nigeria had lost nearly 60% of gross oil revenue to deductions under the PIA, which allocates 30% each to frontier exploration and NNPCL’s management fees. He confirmed moves to amend the law to recover lost revenues.

President Bola Tinubu has also ordered a review of deductions by key revenue agencies, including NNPCL, Customs, FIRS, and NUPRC, to boost public savings and unlock funds for growth.

Industry Reactions

Energy expert Ademola Adigun faulted the frontier allocation as “unrealistic and too high,” recommending a cap of 10% instead of 30%.

But energy law scholar Professor Dayo Ayoade of the University of Lagos cautioned against hasty amendments to the PIA, stressing that the law was the product of nearly two decades of negotiations.

He argued that frontier exploration should be liberalised for private investors with tax incentives, rather than sustained with public funds through NNPCL.

Meanwhile, oil workers’ unions PENGASSAN and NUPENG have rejected proposals to strip NNPCL of oil and gas management, warning it could destabilise the industry and threaten workers’ welfare.