NNPCL gets ₦318bn for frontier oil search amid calls for revenue review
As NNPCL banks billions for new oil searches, experts warn that the 30 percent deduction rule is draining public funds.
The Nigerian National Petroleum Company Limited (NNPCL) has received more than ₦318 billion in the first eight months of 2025 to fund frontier oil exploration, despite mounting concerns about the strain such deductions place on public revenues.
Documents from the September Federation Account Allocation Committee (FAAC) meeting, reviewed by The PUNCH, showed that the deductions, taken directly from Production Sharing Contract (PSC) profits, are made automatically each month in line with the Petroleum Industry Act (PIA) 2021.
The Act mandates that 30 percent of profits from PSCs be channelled into the Frontier Exploration Fund to finance oil search across under-explored inland basins, including Anambra, Bida, Dahomey, Sokoto, Chad and Benue.
Between January and August, the deductions accumulated ₦318.05 billion for NNPCL, even though total PSC profits of ₦1.06 trillion fell short of the ₦1.58 trillion target. By law, the same 30 percent was also set aside as NNPCL’s management fee, bringing the company’s total receipts from both lines to about ₦636 billion over the eight-month period.
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The flow of funds has been highly volatile. In June, frontier deductions slumped to just ₦6.8 billion after PSC profits collapsed, before rebounding to a record ₦78.9 billion in August as profits spiked. Despite these swings, the automatic deductions have consistently diverted revenue that would otherwise flow into the Federation Account. The account itself has received about ₦424 billion from PSC profits this year, far below the budgeted ₦631 billion.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which manages the fund, unveiled a 2025 Frontier Basin Exploration and Development Plan in July. The plan outlines seismic surveys, stress-field detection, data integration and drilling programmes across the basins.
Work includes logging and testing of the Eba-1 well in the Dahomey basin, drilling of a new wildcat in Bida, reappraisal of Wadi wells in Chad, and reassignment of the Ebeni-1 well in Benue. NUPRC chief executive Gbenga Komolafe said the results would guide future exploration and asset de-risking.
Still, questions about transparency remain. A special FAAC subcommittee recently met with NNPCL, NUPRC and the Central Bank of Nigeria, demanding detailed records of projects funded through the deductions. NNPCL was directed to submit a comprehensive breakdown of past and ongoing frontier work, but as of mid-September, the assignment was still described as “work in progress.”
The rising deductions have triggered a policy debate. Budget Office Director-General Tanimu Yakubu warned earlier this year that Nigeria had lost nearly 60 percent of its gross oil revenue to statutory provisions under the PIA, which allocates 30 percent each to NNPCL’s management fees and frontier exploration. He urged a review, arguing that the arrangement left a gaping hole in public finances at a time of weak oil prices and production shortfalls.
President Bola Tinubu has since ordered a reassessment of revenue retention practices by key agencies, including NNPCL, as part of wider reforms to boost government savings and spending efficiency. Meanwhile, industry unions have opposed attempts to alter the PIA or restructure NNPCL, warning that such moves could destabilise the oil sector and threaten jobs.
Energy experts remain divided. Oil and gas analyst Ademola Adigun described the 30 percent allocation for exploration as “unrealistic and too high”, suggesting it be cut to no more than 10 percent. But University of Lagos energy law scholar Dayo Ayoade cautioned against hasty amendments, stressing that the PIA was the product of nearly two decades of negotiations. He argued instead for stronger accountability and greater private sector participation in frontier drilling.
With frontier exploration now well-funded but under tight scrutiny, the coming months are likely to determine whether NNPCL can justify its use of ₦318 billion and whether the government will press ahead with changes to Nigeria’s oil revenue framework.
