Oil-Producing States Share N1.51trn Derivation Revenue in 2025

SAMUEL MOBOLAJI

Nigeria’s nine oil-producing states earned a combined N1.51 trillion from the 13 per cent oil derivation fund in 2025, more than double the N671.92 billion received in 2024. The sharp increase underscores how fluctuations in crude oil earnings continue to reshape sub-national fiscal strength.

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The derivation fund, reserved strictly for oil-producing states as compensation for resource extraction and environmental impact, remains the most decisive fiscal advantage for these states. While VAT and statutory allocations contribute to overall FAAC inflows, derivation revenue often forms a substantial portion of their net receipts.

Abia State, ranked ninth among the beneficiaries, received N20.51 billion in 2025, up from N6.69 billion in 2024. This represents a 206.5 per cent increase, driven by improved oil-linked inflows. Yet derivation still accounts for a smaller share of Abia’s revenue mix compared to VAT and statutory allocations. The state’s net statutory allocation stood at N81.84 billion, VAT inflows at N79.24 billion, and EMTL receipts at N5.20 billion.

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The broader picture shows that while Abia’s fiscal profile reflects a gradual strengthening of oil-related earnings, it lacks the dominance seen in core oil-producing peers such as Delta, Akwa Ibom, and Rivers. For these states, derivation revenue continues to anchor fiscal performance, reinforcing their dependence on oil markets.

Overall, the N1.51 trillion distributed in 2025 highlights both the opportunities and vulnerabilities of Nigeria’s oil-dependent fiscal system. As oil prices and production volumes fluctuate, so too does the financial stability of the states most reliant on derivation inflows.