Key Points

• Crude earnings dropped 43 percent to ₦1.08 trillion.

• Exchange-rate gains inflated fiscal performance on paper.

• Experts cite opaque deals and data gaps in crude earnings.

Nigeria’s income from selling crude oil and gas fell sharply in 2024, dropping 43% to 1.08 trillion. This happened even though production picked up slightly. The Budget Office’s fourth-quarter report says that the number is down ₦824.66 billion from last year’s ₦1.90 trillion.

The report shows that Nigeria’s economy is still hurting because of structural problems, unclear trading, and oil contracts that are linked to debt. The government didn’t reach its revenue goal by more than a quarter, even though crude output and the value of the currency went up.

Crude earnings drop because of low tax revenues

Before taxes, the total revenue from oil and gas was 15.07 trillion, which was 24.6% less than the 19.99 trillion budget. Even though inflows almost doubled from 2023, a lot of that increase came from royalties and exchange-rate gains instead of actual crude sales.

Only eight percent of total oil revenue came from crude and petrol sales. This shows that taxes and royalties have become the government’s main sources of cash, taking over from traditional exports. Royalty payments rose by 179% to ₦6.99 trillion, thanks to stricter compliance with the Petroleum Industry Act.

A gain in the exchange rate hides poor operational results

One of the biggest boosts came from the revaluation of the exchange rate, which went up to ₦4.24 trillion in 2024, a 435 percent increase. Still, oil profits fell short of expectations because production averaged only 1.43 million barrels per day, which was below the target of 1.78 million bpd.

Experts say that the difference between higher production and lower earnings points to shady accounting and crude-for-loan deals. Ademola Adigun, an energy analyst, said that Nigeria has promised to pay off its debts with up to 272,500 barrels of oil a day, which limits new revenue streams.

Experts warn about the risks of crude-for-loan and data opacity

Analysts say that the drop in crude earnings even though production is up shows that the sector’s revenue and transparency are very bad. Prof. Dayo Ayoade from Lagos State University said, “We are told that production is up, but the numbers don’t show that.”

He and others say that the unclear crude-for-cash system and poor NNPC oversight are hiding the real amount of money the country makes. Aliyu Ilias, a development economist, said that underreported swap deals and refinery deliveries could be messing up official data.

The World Bank also pointed out that the NNPC didn’t send in half of the subsidy savings for 2024, saying that it had ₦500 billion in unaccounted revenue. The government has since extended its audit of oil agency payments until December 2024.