The Nigerian National Petroleum Company (NNPC) Limited has amassed ₦445.4 billion in management fees from production-sharing contract (PSC) profit oil over an 11-month period, from January to November 2025. This substantial sum represents 30 percent of the ₦1.48 trillion generated from these contracts during the same timeframe, according to data released by the Federation Account Allocation Committee (FAAC).

This figure signifies a significant surge compared to the previous year, with PSC management fees in the January-November 2024 period totaling ₦204.04 billion. The total profit oil from PSCs in 2024 stood at ₦680.15 billion, highlighting a more than doubling of the management fee earnings for the NNPC.

Production-sharing contracts are fundamental agreements between the NNPC, acting as the federal government’s representative, and international oil companies. These contracts delineate how crude oil output is divided, with “profit oil” being the portion remaining after operating expenses, known as “cost oil,” are accounted for.

Under the established framework for PSCs, 30 percent of the “profit oil” is designated as a management fee for the NNPC, another 30 percent is allocated to the frontier exploration fund, and the remaining 40 percent is remitted directly to the federation account.

Despite the impressive year-on-year growth, the ₦445.4 billion collected in management fees fell short of the targeted ₦651.31 billion for the period. Monthly earnings fluctuated, with August recording the highest receipt at ₦78.9 billion, while June saw the lowest at ₦6.8 billion.

Beyond its role in PSCs, the NNPC also generates revenue from joint venture operations and its sole-risk oil fields. During the period in question, the company remitted ₦445.4 billion to the frontier exploration fund and transferred ₦593.87 billion into the federation account.

The retention of revenue by major government agencies, often termed “super agencies,” has been a subject of increasing scrutiny. In October 2025, the World Bank noted that funding allocated to Nigeria’s revenue-generating bodies far exceeded that of their counterparts in other African nations.

These concerns have led to government initiatives aimed at improving fiscal discipline. Earlier in January 2024, the federal government mandated that all self-funded agencies automatically remit 50 percent of their total revenue to the treasury. This directive was further reinforced on August 13, 2025, with President Bola Tinubu ordering a comprehensive review of revenue deduction and retention practices across all government entities.

The ongoing review, spearheaded by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, will encompass key revenue-generating bodies. This includes the NNPC, the Federal Inland Revenue Service, the Nigeria Customs Service, the Nigerian Upstream Petroleum Regulatory Commission, and the Nigerian Maritime Administration and Safety Agency.

Read Original

Keywords: NNPC, production sharing contracts, management fees, FAAC data, profit oil, frontier exploration fund, federation account, oil revenue