The Nigerian Extractive Industries Transparency Initiative (NEITI) has revealed that the country recorded its highest-ever Federation Account disbursements in the third quarter of 2025, with a total of N6.0 trillion shared among the three tiers of government.
The landmark figure, which includes 13 per cent derivation payments to oil-producing states, was disclosed in NEITI’s Quarterly Review of FAAC Allocations and Disbursements for Q3 2025, released on Tuesday in Abuja.
The review highlights strong revenue performance, improved debt indicators for states, but warns of looming fiscal risks if gains are not protected.
According to the report, quarter-on-quarter FAAC allocations grew by 55.6 per cent compared to Q3 2024, effectively more than doubling disbursements over a two-year period.
A breakdown of the N6.0 trillion showed that the Federal Government received N2.19 trillion, state governments N1.97 trillion, while local governments got N1.45 trillion.
NEITI noted that statutory revenues accounted for 62 per cent of shared receipts, followed by Value Added Tax (VAT) at 34 per cent, while the Electronic Money Transfer Levy (EMTL) and non-oil excess revenue augmentations contributed 2 per cent each.
States’ allocations were derived from statutory revenues, VAT, EMTL and the Ecological Fund, with an additional N100 billion augmentation from the non-oil excess revenue account.
Among the 36 states, Lagos State emerged as the highest recipient, raking in N179.3 billion in the quarter, an average of N59.76 billion monthly. Kano State followed with N79.2 billion, while Rivers State received N78.8 billion.
At the lower end, Nasarawa State received N42.5 billion, Ebonyi N42.9 billion, and Ekiti N43 billion, translating to an average monthly allocation of N14.1 billion for Nasarawa. The report showed a N136.8 billion gap between the highest and lowest state allocations, noting that Lagos alone earned more than double the combined receipts of Kano and Rivers individually.
Nine oil-producing states also received a combined N424 billion as 13 per cent derivation revenue, significantly reshaping revenue rankings. Delta State topped the derivation chart with N180.68 billion, followed closely by Akwa Ibom, Bayelsa and Rivers, which dominated overall receipts during the quarter.
On debt, NEITI disclosed that deductions from state allocations for debt servicing and other obligations fell to N225.89 billion, representing a 6.5 per cent decline from the previous quarter. The average debt service ratio stood at 9.4 per cent, with individual states ranging from 1.5 per cent to 26.8 per cent.
While about one-third of states recorded debt service ratios below 5 per cent, more than two-thirds were below 10 per cent, indicating improved fiscal headroom. However, Ogun State topped the debt chart at 26.8 per cent, followed closely by Lagos at 26.5 per cent, with Cross River ranking third.
Looking ahead, NEITI warned that early Q4
2025 indicators point to possible revenue pressures, citing lower average oil prices and slightly higher exchange rates. While average crude oil production stood at 1.64 million barrels per day in Q3, output dropped to 1.59 million barrels per day in the first month of Q4, a trend that could dampen foreign exchange inflows and distributable revenue if sustained.
The report also revealed that derivation revenue from solid minerals was unavailable for distribution, as receipts were negligible. The last solid minerals revenue distribution occurred in August 2024.
Commenting on the report, NEITI Executive Secretary, Musa Adar, welcomed the strong performance but cautioned against complacency.
He said: “The Q3 2025 FAAC results are encouraging, but windfalls must be managed with discipline. Greater transparency, realistic budgeting, and stronger stabilization mechanisms will ensure these resources deliver durable benefits for all Nigerians.”
Adar warned that volatile oil markets and optimistic budget assumptions pose risks to fiscal sustainability, urging authorities to act swiftly.
NEITI recommended the publication of up-to-date balances and liabilities of key federation accounts, including the Non-oil Excess Account, Domestic Excess Crude Account, Stabilisation Fund and Ecology Fund, with detailed notes explaining FAAC transactions, refunds and net-offs to enhance transparency.
The agency also called for consistent application of Appropriation Act benchmarks, use of the Stabilisation Account to smooth monthly disbursements, and channeling exchange rate gains into fiscal buffers.
In addition, NEITI urged the Federal Government and sub-nationals to strengthen sovereign wealth savings through regular transfers to the Nigeria Sovereign Wealth Fund, adopt more conservative oil price and production assumptions, and accelerate revenue diversification, particularly in mining and downstream petroleum reforms.
The agency called on the Office of the Accountant-General of the Federation, FAAC, RMAFC, National Economic Council, National Assembly and state governments to act on its recommendations to deepen transparency, accountability and long-term fiscal sustainability.
While the Q3 2025 figures signal growing revenues, NEITI stressed that the moment presents a critical test of fiscal discipline.
“Though the Quarter 3 2025 FAAC results are encouraging, the data presents an opportunity for government to institutionalise prudent fiscal practices that protect these gains and reduce vulnerability to commodity shocks,” the report added.