Lagos Receives N179bn as Oil States Share N424bn from FAAC’s N6tr Allocation

Nigeria’s Federation Account Allocation Committee (FAAC) recorded its largest quarterly revenue distribution in the third quarter of 2025, with total disbursements climbing to ₦6 trillion, reflecting a sharp increase in shared income across the federation. However, the record inflow also raises concerns over fiscal sustainability as crude oil prices soften and production levels decline ahead of the final quarter of the year.

According to data released by the Nigerian Extractive Industries Transparency Initiative (NEITI) in its Q3 2025 Quarterly Review, the allocation represents a 55.6 percent increase year-on-year compared to the same period in 2024. The figures also indicate that FAAC distributions have more than doubled within the past two years, signaling a major shift in government revenue flows.

Between September and November 2025, a total of ₦9.62 trillion was shared among the three tiers of government. In response to the rising allocations, Delta State Governor, Sheriff Oborevwori, urged state governors nationwide to improve living conditions for citizens, emphasizing that increased revenues should translate into tangible development outcomes.

The ₦6 trillion allocation includes 13 percent derivation funds paid to oil-producing states, highlighting the continued influence of petroleum-related revenues in Nigeria’s fiscal structure.

Allocation Breakdown Across Government Tiers

A detailed breakdown of the FAAC distribution shows that:

• The Federal Government received ₦2.19 trillion
• State governments collectively obtained ₦1.97 trillion
• Local governments were allocated ₦1.45 trillion

This distribution reflects a broad-based increase in statutory transfers across all levels of government.

Governor Oborevwori, while speaking at the flag-off ceremony of the ₦39.3 billion Otovwodo Flyover Project in Ughelli North Local Government Area, stated that claims of insufficient funds by some quarters are no longer accurate. He maintained that state governments now possess adequate financial resources and should be transparent with citizens.

Revenue Sources Powering FAAC Allocations

NEITI’s analysis revealed that:

• Statutory revenues accounted for 62 percent of total shared funds
• Value Added Tax (VAT) contributed 34 percent
• Electronic Money Transfer Levy (EMTL) provided 2 percent
• Non-oil excess revenue augmentation also added 2 percent

This revenue mix underscores the dominance of oil-linked income and taxation in sustaining federation account inflows.

Additionally, distributions to the 36 states—sourced from statutory revenue, VAT, EMTL, and the Ecological Fund—were boosted by an extra ₦100 billion augmentation from the non-oil excess revenue account, further strengthening subnational finances during the quarter.

Lagos Tops FAAC Allocation Table

State-by-state data revealed significant disparities in revenue receipts. Lagos State emerged as the highest recipient, collecting ₦179.3 billion during the quarter—equivalent to an average monthly inflow of ₦59.76 billion.

Other high-receiving states include:

• Kano State – ₦79.2 billion
• Rivers State – ₦78.8 billion

At the lower end of the spectrum:

• Nasarawa State received ₦42.5 billion
• Ebonyi State obtained ₦42.9 billion
• Ekiti State collected ₦43 billion

NEITI noted that the gap between the highest and lowest state allocations stood at ₦136.8 billion in Q3 2025. Lagos alone received more than twice the combined allocations of Kano and Rivers, the second and third-highest recipients.

Oil-Producing States Benefit from Derivation Funds

Among oil-producing states, Delta State recorded the highest gross allocation at ₦180.68 billion, driven largely by derivation payments. Other major beneficiaries included Akwa Ibom, Bayelsa, and Rivers States, which also gained significantly from oil-linked inflows during the quarter.

Debt Deductions and Fiscal Health of States

On debt obligations, NEITI disclosed that ₦225.89 billion was deducted from state allocations for debt servicing and related commitments. This figure represents a 6.5 percent reduction compared to the previous quarter.

The average debt service ratio across states stood at 9.4 percent, with individual ratios ranging from 1.5 percent to 26.8 percent. Approximately one-third of states recorded debt service ratios below five percent, while more than two-thirds remained under ten percent—an indication of gradual improvement in subnational debt sustainability.

Warning Signs Ahead for Q4 2025

Despite the record-breaking inflows in Q3, NEITI cautioned that early indicators for Q4 2025 suggest increasing fiscal pressure. The agency attributed this to lower average oil prices and slightly elevated exchange rates compared to Q3 levels.

Average daily crude oil output 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, this decline could negatively affect foreign exchange earnings and future FAAC distributions.

NBS Confirms Monthly FAAC Disbursements

The National Bureau of Statistics (NBS), in its FAAC Allocation Reports for September to November 2025, confirmed that:

• ₦3.64 trillion was disbursed in September
• ₦3.05 trillion was shared in October
• ₦2.93 trillion was allocated in November

According to NBS, the funds comprised:

• ₦2.16 trillion from the Statutory Account
• ₦49.87 billion from EMTL
• ₦719.83 billion from VAT

The report also showed that ₦141.39 billion was distributed to oil-producing states from the 13 percent derivation fund, while revenue-generating agencies received allocations as cost of collection:

• Nigeria Customs Service (NCS) – ₦29.64 billion
• Federal Inland Revenue Service (FIRS) – ₦50.71 billion
• Nigerian Upstream Petroleum Regulatory Commission (NUPRC) – ₦34.92 billion