Nigeria’s 2025 budget revenue projections face a serious threat as the price of Bonny Light crude oil has slumped to $73.53 per barrel, a 10.6% decline from $84.02 per barrel recorded on January 15. This dip raises concerns about the Federal Government’s ability to meet its ambitious revenue target, which heavily relies on oil earnings.
The 2025 budget is anchored on a crude oil price benchmark of $75 per barrel and an oil production target of 2.06 million barrels per day (bpd). With a total revenue projection of N36.35 trillion, 56% of which is expected from oil sales, the recent slump could result in a 6.6% shortfall in projected oil revenues. The situation is further compounded by the fact that Nigeria’s crude oil production remains below the budgeted benchmark.
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the country’s oil production stood at 1.737 million bpd in January 2025, an increase from 1.667 million bpd in December 2024. However, this still falls significantly short of the 2.06 million bpd target, exacerbating concerns over revenue generation.
Economic analysts have raised alarms over the ripple effects of declining oil prices. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the dual impact of falling oil prices.
> “If energy prices fall, it will have implications for our revenue. The government’s oil income will decline, potentially straining budget implementation. However, a drop in crude prices could be beneficial for businesses, as it typically leads to lower costs of petroleum products such as petrol, diesel, and jet fuel,” he stated.
Similarly, Mazi Colman Obasi, National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), noted that while lower crude prices may negatively affect the budget execution, they could also reduce refining costs.
“Besides impacting government revenue, a drop in oil prices could result in lower petroleum product prices, easing cost pressures on industries and consumers,” he explained.
The federal government’s heavy reliance on oil revenues means that any prolonged slump in crude prices could widen fiscal deficits, disrupt planned expenditures, and force borrowing to fill revenue gaps. With ongoing economic challenges, including inflationary pressures and exchange rate volatility, policymakers may need to explore alternative revenue sources or adjust budgetary expectations to navigate the financial uncertainty ahead.
As global oil markets remain volatile, Nigeria’s fiscal stability hangs in the balance, raising urgent questions about the sustainability of its revenue framework and economic resilience in 2025.
PIONEER NEWS 