NEITI: FAAC Q3 inflows reach N6trillion

Nigeria recorded a historic N6.0 trillion in Federation Account Allocation Committee (FAAC) disbursements in the third quarter (Q3) of 2025, according to a new analysis released by the Nigerian Extractive Industries Transparency Initiative (NEITI).

The figures, contained in NEITI’s Quarterly Review of FAAC Allocations and Disbursements for Q3 2025, show a sharp rise in federation revenues, improved subnational debt metrics, and highlight policy priorities aimed at safeguarding fiscal stability ahead of the fourth quarter of the year.

Total FAAC disbursements for the quarter stood at N6.0 trillion, inclusive of 13 per cent derivation payments to oil-producing states. This represents a 55.6 per cent year-on-year increase compared with Q3 2024, more than doubling total quarterly allocations over the past two years.

A breakdown of the allocations shows that the Federal Government received N2.19 trillion, state governments N1.97 trillion, and local governments N1.45 trillion. Statutory revenues accounted for 62 per cent of the shared receipts, while Value Added Tax (VAT) contributed 34 per cent. Proceeds from the Electronic Money Transfer Levy (EMTL) and augmentation from the Non-Oil Excess Revenue Account also supported the distribution.

The allocations to the 36 states comprised statutory revenues, VAT, EMTL and Ecological Fund proceeds. In addition, states received N100 billion as augmentation from the non-oil excess revenue account.

Lagos State emerged as the highest-earning state, receiving N179.3 billion during the quarter, equivalent to an average monthly allocation of N59.76 billion. Kano State followed with N79.2 billion, while Rivers State received N78.8 billion. At the lower end of the scale, Nasarawa State received N42.5 billion, Ebonyi N42.9 billion, and Ekiti N43 billion.

The data show an average monthly allocation of N14.1 billion to Nasarawa State, with a gap of N136.8 billion between the highest- and lowest-receiving states. Lagos’ allocation was more than double the combined receipts of the second- and third-placed states, Kano and Rivers.

According to the Review, nine oil-producing states received N424 billion as 13 per cent derivation revenue during the quarter, significantly reshaping the allocation rankings. The four major oil-bearing states — Akwa Ibom, Bayelsa, Delta and Rivers — dominated derivation receipts, with Delta State recording the highest allocation at N180.68 billion.

NEITI also disclosed that deductions from states’ allocations for debt servicing and other obligations totalled N225.89 billion, representing a 6.5 per cent decline from the previous quarter. The average debt service ratio across states stood at 9.4 per cent, with individual ratios ranging from 1.5 per cent to 26.8 per cent.

Ogun State recorded the highest debt service ratio at 26.8 per cent, followed closely by Lagos State at 26.5 per cent, while Cross River State ranked third. Overall, about two-thirds of the states posted debt service ratios below 10 per cent, reflecting improving fiscal conditions at the subnational level.

Looking ahead, NEITI warned that early indicators for Q4 2025 point to potential pressure on revenues, citing lower average crude oil prices and slightly higher exchange rates compared with Q3. Average daily crude oil production declined from 1.64 million barrels per day in Q3 to 1.59 million barrels per day in the first month of Q4.

If sustained, these trends could weaken foreign exchange inflows and reduce distributable revenues in the final quarter of the year. NEITI also noted that derivation revenue from the solid minerals sector was unavailable for distribution, having remained negligible. The last distribution from solid minerals revenues occurred in August 2024.

Commenting on the report, NEITI Executive Secretary, Musa Sarkin Adar, welcomed the strong remittance performance and easing debt burden on states but cautioned against fiscal complacency amid oil market volatility and optimistic budget assumptions.

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To strengthen fiscal resilience, NEITI recommended the 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-linked accounts. It also called for clearer explanations of FAAC transactions, refunds, net-offs and priority project entries to enhance transparency.

The agency urged consistent application of Appropriation Act benchmarks, the use of the Stabilisation Account to smooth monthly disbursements, and the transfer of exchange gains into stabilisation buffers. It further advised regular contributions to the Nigeria Sovereign Wealth Fund and the adoption of more conservative oil price and production assumptions in budget planning.

NEITI also called for accelerated revenue diversification through reforms in the mining sector, speedy amendment of the Mineral and Mining Act, continued downstream petroleum reforms, and full implementation of the Petroleum Industry Act to boost domestic refining and value addition.

While describing the Q3 2025 FAAC results as encouraging, NEITI stressed that the revenue gains present an opportunity for governments at all levels to entrench prudent fiscal practices and reduce exposure to commodity price shocks.

“The Q3 2025 FAAC results are encouraging, but windfalls must be managed with discipline. Greater transparency, realistic budgeting, and stronger stabilisation mechanisms will ensure these resources deliver durable benefits for all Nigerians,” Sarkin Adar said.