The Nigerian National Petroleum Company Limited (NNPCL) has received ₦318.05 billion between January and August 2025 for frontier oil exploration, according to newly obtained documents from the September 2025 Federation Account Allocation Committee (FAAC) meeting.
This funding, drawn from 30% of Production Sharing Contract (PSC) profits, was automatically allocated to the Frontier Exploration Fund as mandated by the Petroleum Industry Act (PIA) 2021. The PIA stipulates that the fund be used for exploration activities in Nigeria’s inland basins, including Anambra, Bida, Dahomey, Sokoto, Chad, and Benue.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which manages the fund via an escrow account, unveiled a Frontier Basin Exploration and Development Plan in July 2025. This plan includes seismic surveys, wildcat drilling, and reappraisals across various basins, such as:
Logging and testing of Eba-1 well in Dahomey
Drilling of a new wildcat well in Bida Basin
Reassessment of Wadi wells in Chad
Reassignment of Ebeni-1 well in Benue
Volatile Monthly Allocations Reflect PSC Profit Swings
Analysis of FAAC data shows wide fluctuations in monthly deductions:
Month PSC Profit (₦bn) 30% Deduction (₦bn)
January 105.91 31.77
February 127.67 38.30
March 204.96 61.49
April 121.93 36.58
May 129.33 38.80
June 22.77 6.83
July 84.48 25.34
August 263.13 78.94
By August, the total deduction stood at ₦318.05bn, mirroring NNPCL’s management fee, which is also pegged at 30% of PSC profits—bringing the total received by NNPCL in the first eight months of 2025 to ₦636.1bn.
Meanwhile, the Federation Account, which is entitled to 40% of PSC profits, received ₦424.07bn in the same period—far below the ₦631.57bn budgeted target, leaving a ₦207.5bn shortfall.
Government Launches Probe Into Revenue Retention Practices
The Federal Executive Council (FEC), under President Bola Tinubu, has ordered a review of deduction and retention practices by major revenue-generating agencies, including:
NNPCL
Federal Inland Revenue Service (FIRS)
Nigeria Customs Service
Nigerian Maritime Administration and Safety Agency (NIMASA)
NUPRC
Tinubu’s directive follows concerns raised by the Director-General of the Budget Office, Tanimu Yakubu, who stated that Nigeria lost nearly 60% of gross oil revenue due to the PIA’s allocation rules. He emphasized that without new revenue sources, Nigeria’s public finances are being severely strained.
A FAAC subcommittee has since met with NNPCL, the CBN, and NUPRC, requesting detailed financial records of frontier exploration projects, especially those implemented before and after the PIA was enacted. NNPCL was instructed to submit these documents by September 19, 2025, though the report is still pending.
Critics Question 30% Allocation as “Too High”
Energy and fiscal policy experts have raised concerns over the size and structure of the frontier deductions.
Oil and gas analyst and CEO of AHA Strategies, Ademola Adigun, described the 30% allocation as “unrealistic and excessive”, especially in light of Nigeria’s current fiscal constraints.
“The money allocation is too high and not justifiable under the current economic realities. I would recommend that the frontier fund be cut down to a maximum of 10%,” Adigun stated.
Similarly, Professor Dayo Ayoade, an energy law expert from the University of Lagos, warned against a hasty amendment of the PIA but stressed the need for greater transparency and a market-driven approach to exploration.
“Exploration should be liberalized and left to private investors with incentives, not funded by public money through NNPCL,” Ayoade added.
He also questioned NNPCL’s commercial credibility, noting that the company’s revenue is mostly derived from joint ventures and government-backed PSCs, not from independently profitable operations.
Oil Workers Oppose Planned PIA Amendments, Asset Divestments
Meanwhile, oil unions—PENGASSAN and NUPENG—have strongly opposed any attempt by the Federal Government to amend the PIA or divest NNPCL’s stakes in Joint Venture assets.
They warned that such moves could destabilize Nigeria’s oil sector, threaten job security, and weaken NNPCL’s capacity to operate as a national energy company.
The unions have called on President Tinubu to halt the proposed reforms and consult with industry stakeholders before making structural changes to the PIA or NNPCL’s operations.
The NNPCL’s ₦318bn frontier oil exploration funding has reignited debates about transparency, fiscal responsibility, and the future of Nigeria’s oil governance framework under the Petroleum Industry Act. With the Tinubu administration signaling reform and scrutiny, the coming months could prove decisive for both the NNPCL and Nigeria’s oil-dependent economy.
