By Bassey Udo
Allocations from the Federation Accounts and monthly disbursements to the three tiers of government was the highest in the third quarter of 2025, detailed analysis of the Federation Account Allocation Committee (FAAC) records by the Nigerian Extractive Industries Transparency Initiative (NEITI) has revealed.
The report of the findings from the analysis contained in the latest edition of NEITI’s quarterly review for the third quarter of 2025 showed that total FAAC disbursements to the Federal, States, Local Governments and the Federal Capital Territory (FCT), including payments of 13 percent derivation to oil producing states, was about N6 trillion.
The analysis of records showed a historic rise in Federation Account receipts by the three tiers of government, improved state debt metrics, and a set of policy priorities to protect fiscal stability heading into Q4 2025.
The Report said the year-on-year Quarterly FAAC allocations in 2025 grew by 55.6 percent compared with the figures in the corresponding period in 2024, which more than doubled allocations over a two-year period.
A breakdown of the FAAC disbursements showed that the federal government received a total of N2.19 trillion, the 36 states and FCT N1.97 trillion and the 774 local governments N1.45 trillion.
Also, the report showed that distribution to the 36 states of the Federation comprised of revenues from statutory sources, Value Added Tax (VAT) accounted for 34 percent, Electronic Money Transfer Levy (EMTL) and Ecological fund.
Detailed review of the disbursements showed allocations for Statutory revenues accounted for 62 percent of shared receipts, while VAT accounted for 34 percent, while EMTL and augmentation from non-oil excess revenue accounted for 2 percent each.
Besides, the report said States received additional N100 Billion as augmentation from the non-oil excess revenue account.
A breakdown of allocations to states showed that Lagos State received the highest revenue of N179.3 billion for the quarter under review, translating to an average monthly receipt of N59.76 billion, followed by Kano, with N79.2 billion, and Rivers with N78.8 billion.
Conversely, the report said Nasarawa state received the lowest allocation of N42.5 billion, followed by Ebonyi state with N42.9 billion and Ekiti with N43 billion.
The data also showed an average monthly allocation of N14.1 billion to Nasarawa state, indicating that the range between the highest and lowest state allocations was N136.8 billion, while Lagos States’ allocation of N179Billion was more than double the amount received by the second and third highest – grossing states of Kano and Rivers respectively.
From the Quarterly Review, nine oil producing states received a total of N424 billion as 13 percent derivation revenue, which materially altered state rankings in the review, and throwing up the derivative states as receiving nearly half of the gross allocations from FAAC.
A closer look at the derivative disbursements in the report showed that four oil bearing states, including Akwa Ibom, Bayelsa, Delta and Rivers States in the stand-out region, with Delta state grossing the highest in revenue allocation of N180.68Billion.
The NEITI report also revealed that the deductions from states’ allocations to service debts and other obligations totalled N225.89 billion, indicating a 6.5 percent decline from previous quarter.
The average debt service ratio across states was 9.4 percent, with individual state ratios ranging from 1.5 percent to 26.8 percent.
However, about one-third of the states have a debt service ratio of less than 5 percent, while more than two-thirds have a ratio of less than 10 percent.
Ogun State, with a ratio of 26.8 percent, topped the chart, closely followed by Lagos (26.5 percent), and Cross River in third position, the NEITI report disclosed.
On the outlook for Q4 2025, NEITI Quarterly Review noted that early Q4 indicators showed lower average crude oil prices and slightly higher exchange rates, compared with Q3 figures.
An average daily crude oil production of 1.64 million barrels per day was recorded in Q3, while 1.59 million barrels per day was recorded against the first month of Q4.
The report noted that if these developments were sustained, there could be a reduction in foreign exchange denominated inflows, leading to lower distributable revenues in Q4 of 2025.
The NEITI report also disclosed that derivation revenue from the solid minerals sector was unavailable for distribution to Federation Account beneficiaries because it was negligible and insufficient for distribution. The last distribution of revenues from solid minerals occurred in August 2024.
The Executive Secretary of NEITI, Musa Sarkin Adar, welcomed the strong remittance performance and the reduction in states’ debt burden, but drew attention to the volatility in the global oil markets and optimistic budget benchmarks, which may pose risks to fiscal sustainability.
To protect gains and strengthen fiscal resilience, NEITI report recommended the consistent publication of up-to-date balances and liabilities for key federation accounts, including the non-oil Excess Account, Domestic Excess Crude Account, Stabilisation Fund, Ecology Fund, and other mineral resource-linked accounts.
The report said the publication should provide clear notes explaining FAAC transactions, refunds, net-offs and priority project entries in order to enhance transparency and accountability in the inflows, allocations and disbursements from the federation accounts.
The Review also pointed out the need to apply the procisions of the Appropriation Act benchmarks consistently when determining monthly distributable revenues, use the Stabilisation Account to smoothen monthly disbursements, transfer exchange gains into stabilisation buffers.
Other recommendations in life the need for the government at all levels to ensure the growth of Nigeria’s sovereign wealth and stabilisation capacity, by committing to regular transfers to the Nigeria Sovereign Wealth Fund and other related stabilisation mechanisms in line with the fiscal responsibility frameworks.
The NEITI Quarterly Review further advised governments at all levels to adopt realistic budget benchmarks, by setting a more conservative and achievable crude oil production and price assumptions in the budget to reduce implementation gaps, deficit and debt metrics.
This is in addition to the call for an accelerated revenue diversification, by prioritising reforms that would attract investments into the mining sector, expedite legislation to modernize the Mineral and Mining Act, support reforms in the downstream petroleum sector as well as the full implementation of the Petroleum Industry Act to expand domestic refining and value addition.
Besides, NEITI called on the Office of the Accountant General of the Federation, the Revenue Mobilisation Allocation and Fiscal Commission, FAAC, the National Economic Council, the National Assembly, and state governments to act on the recommendations in order to strengthen transparency, accountability, and long-term fiscal sustainability.
Although the Q3 2025 FAAC allocations showed encouraging results, NEITI reiterates that the data presents opportunity to government to institutionalize prudent fiscal practices that would protect the gains recorded so far in growing revenue and reduce vulnerability to commodity shocks.
“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,” the NEITI report said.
