Oil Tax Revenue Rises 41.7% to N3.69tn
Improved crude oil production and better compliance from oil companies have pushed Nigeria’s oil tax revenue to N3.69tn in the first half of 2025.
This represents a 41.7 per cent increase over the N2.604tn collected in the same period last year.
This is according to an analysis of the Federation Account Allocation Committee’s monthly reports and the latest revenue performance figures presented by the Federal Inland Revenue Service at the monthly Federal Allocation Accounts Committee meeting.
According to reports, between January and June on Tuesday crude oil production increased to 1.8 million barrels per day, reaching the highest in four years.
The oil tax collections comprise Petroleum Profits Tax, Hydrocarbon Tax, and Company Income Tax from oil and gas companies operating in Nigeria. The report showed that the government’s income tax earnings from oil and gas firms rose month-on-month in June to N411.95bn, up from N362.96bn in May, marking a 13.5 per cent increase.
The report read, “The oil taxes collection for the month of June, 2025 was N411.951bn. This performance is higher than the May 2025 collection of N362.96bn by N48.987bn, representing a 13.50 per cent increase.”
Despite the improvement, the figure still fell short of the monthly target of N600.17bn, reflecting a revenue gap of N188.22bn, or 31.36 per cent.
“It is lower than the 2025 monthly target of N600.2bn by N188.215bn (i.e.31.36 per cent shortfall).
The reason for the increase in the PPT collections when compared with the previous month is due to an increase in receipts from NNPC E&P,” the report added.
According to the FIRS, the bump in revenue was largely driven by improved remittances from the Nigerian National Petroleum Company Exploration and Production Limited, a state-owned upstream subsidiary.
“The reason for the increase in the PPT collections when compared with the previous month is due to an increase in receipts from NNPC E\&P,” the document added.
A month-by-month breakdown of oil tax collections in the first half of 2025 revealed significant fluctuations, with the highest remittance recorded in April at N1.26tn. This was followed by N864.97bn in January, N407.5bn in March, N411.95bn in June, N377.19bn in February, and the lowest figure of N362.96bn in May.
This contrasts with the first half of 2024, when total oil tax collections stood at N2.604tn. Monthly remittances during the period included N325.06bn in January, N763.12bn in February, N241.95bn in March, N304.34bn in April, N599.10bn in May, and N370.81bn in June, indicating a less consistent performance compared to 2025.
The surge in April 2025 tax collection, N1.26tn, remains the highest monthly figure within the review period and was a key contributor to the half-year performance.
Fiscal experts say the year-on-year improvement reflects better upstream production conditions, enhanced monitoring by revenue authorities, and compliance improvements among multinationals and indigenous producers.
Oil taxes constitute one of the largest components of Nigeria’s federally collectable revenues and are crucial to funding budgetary obligations at the federal, state, and local government levels.
The upward trend is also seen as a boost to President Bola Tinubu’s fiscal reform agenda, which aims to increase non-debt revenue while reducing dependence on borrowing to fund public expenditure.
With the Petroleum Industry Act now in implementation and more regulatory pressure on upstream compliance, the government may close the revenue gap in the second half of the year, if crude output and price stability are maintained.
Commenting, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, Muda Yusuf, said the increase in tax remittance is partly due to improved crude oil production, driven by the government’s renewed investments in security and efforts to create a safer operating environment for producers, an initiative that is already yielding positive results.
He said, “The increase in tax remittance is a combination of an improvement in crude oil production. The government has been investing in security and ensuring a more secure environment for crude production. The effort is already yielding results.
“Secondly, there is a better organisation under the new management of the Nigerian National Petroleum Company Limited. In April, the highest remittance was recorded. The reorganisation taking place is bringing a better organisation to the sector. There is now better security, transparency, and management from the oil company. These factors improved tax remittances.”
Speaking further in the interview, the economist identified weak oversight of crude oil exports and low investor participation as potential risks that may hamper increased tax remittance from the petroleum sector. He said Nigeria could boost its oil tax receipts by enhancing transparency and tightening monitoring mechanisms across the crude oil value chain.
“The only thing to improve tax remittance is to increase monitoring of crude sales. Because we still hear about malpractices in the process of determining the volume of crude produced, the amount sold, and all of that,” Yusuf said. “There should be better vigilance on all transactions relating to oil export to ensure that all exports are properly captured for purposes of revenue.”
Reacting to concerns that the recent surge in oil tax revenue has yet to translate to improved living conditions for many Nigerians, Yusuf aligned with President Bola Tinubu’s recent position on equitable distribution of national wealth.
“Recently, President Bola Tinubu told state governors about the impact of the revenue windfall and asked them to ensure that the benefit of increased revenue trickled down to the lowest strata of society,” he said. “He said there was a complaint from the grassroots that they are not feeling the effect. He urged the governors to do more, which means it is something the president also recognises.”