Precious Anga
Lagos — Nigeria’s federation earnings from Production Sharing Contract operations plunged by ₦78.71bn in March 2026, even as global crude prices surged past $100 per barrel, exposing fresh cracks in the country’s oil revenue chain.
Documents presented at Federation Account Allocation Committee meetings show that total PSC distribution to the Federation Account dropped sharply from ₦121.34bn in February to ₦42.64bn in March, a month-on-month decline of 64.9 per cent.
The fall was even steeper on a yearly basis. March 2026 earnings came in far below the ₦204.96bn recorded in March 2025, reflecting a drop of ₦162.33bn.
The weak performance came during a period of strong international oil prices. According to data from the United States Energy Information Administration, Brent crude climbed above $100 per barrel in March and closed the first quarter around $118 per barrel, driven by renewed Middle East tensions and fears over supply disruptions through the Strait of Hormuz.
Despite the oil price rally, Nigeria’s PSC inflows weakened significantly.
A review of first-quarter figures showed total PSC proceeds stood at ₦180.05bn in Q1 2026, down from ₦438.54bn in the corresponding period of 2025. The decline represents a revenue shortfall of ₦258.49bn year-on-year.
The earnings also fell far below the 2026 budget projection of ₦592.10bn, missing target by more than ₦412bn.
Monthly performance painted a similar picture. January 2026 receipts dropped to ₦16.07bn from ₦105.91bn in January 2025. February earnings slipped from ₦127.67bn in 2025 to ₦121.34bn before crashing further in March.
The reports highlighted a major change in the oil revenue framework following Executive Order 9 signed by President Bola Tinubu in February 2026.
Under the former Petroleum Industry Act arrangement, PSC profits were shared using a 30:30:40 formula. In Q1 2025, ₦131.56bn went to NNPC management fees, another ₦131.56bn funded frontier exploration, while only ₦175.42bn representing 40 per cent accrued directly to the Federation Account.
The new directive scrapped both deductions and mandated full remittance of federation oil revenues.
From February 2026, PSC distributions shifted to a 100 per cent federation share, eliminating the 30 per cent Frontier Exploration Fund and the 30 per cent management fee previously retained by NNPC.
President Tinubu said the move became necessary to stop revenue leakages.
“For too long, excessive deductions, overlapping funds and structural distortions in the oil and gas sector have weakened remittances to the Federation Account,” he stated.
Yet, the new structure has not translated into stronger earnings.
Although the federation now receives the entire PSC allocation, total Q1 2026 proceeds stood at only ₦180.05bn barely ₦4.63bn above the ₦175.42bn direct federation share recorded under the old formula in Q1 2025.
The figures point to a deeper problem beyond deductions: a shrinking underlying revenue pool.
The reports also revealed a widening dividend remittance gap. In Q1 2025, NNPC projected ₦230.88bn in interim dividend payments to the Federation Account but made no remittance. In Q1 2026, projected interim dividends rose sharply to ₦813.55bn, yet actual remittance remained empty.
Overall, projected oil and gas revenues from NNPC for Q1 2026 stood at ₦1.41tn. Actual inflows, however, amounted to just ₦180.05bn, leaving a massive shortfall of about ₦1.23tn.
The figures raise fresh concerns over crude production performance, lifting schedules, cost recovery commitments and the efficiency of revenue remittance within Nigeria’s oil sector.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the full effect of higher crude prices may not yet be visible in government accounts because of long transaction and settlement timelines.
“It is still early because export transactions, payment processing and remittances into the Federation Account can take more than two months,” he said.
Yusuf stressed that oil revenue is driven not only by prices but also by production levels.
“Revenue performance is not about oil prices alone. Output matters. It is only recently that Nigeria’s production began moving closer to 1.8 million barrels per day,” he said.
He also pointed to existing forward crude sales arrangements used to finance refinery rehabilitation projects, noting that part of Nigeria’s crude earnings is already tied to debt obligations.
“We have forward sales worth billions of dollars. That means part of future crude revenue has already been committed. Not every gain from higher oil prices will flow directly into government accounts,” Yusuf added.
This article was originally posted at sweetcrudereports.com
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