More than 90 per cent of the projected N60.5 trillion revenue of the Nigerian National Petroleum Company Limited (NNPCL) for 2025 will be absorbed by operating expenses and taxes, raising fresh concerns about profitability, efficiency and long-term sustainability in Nigeria’s oil sector.
Industry disclosures and financial projections indicate that a significant portion of the company’s earnings will go toward operational expenditure (OpEx), crude production costs, joint venture cash calls, debt servicing and statutory tax obligations. Analysts warn that while revenue figures appear robust on paper, the slim margin left after expenses underscores structural weaknesses in the sector.
Energy economists note that Nigeria’s upstream operations remain heavily burdened by high production costs driven by pipeline vandalism, crude theft, ageing infrastructure and security challenges in oil-producing regions. These factors continue to inflate lifting costs, reduce output stability and compress margins.
Despite the heavy cost structure, optimism emerged from billionaire businessman and Chairman of Geregu Power Plc, Femi Otedola, who predicted a rebound of the naira, citing ongoing economic reforms, foreign exchange market adjustments and renewed investor confidence.
Otedola expressed confidence that fiscal discipline, improved crude production levels and strategic investments in energy infrastructure would support currency stability in the medium term. According to him, reforms in the oil and gas sector, if consistently implemented, could strengthen external reserves and improve dollar inflows.
However, policy analysts argue that revenue alone is insufficient without cost containment. They stress the need for NNPCL to aggressively cut waste, enhance transparency and optimize operational efficiency under the Petroleum Industry Act framework.
The transformation of NNPCL from a state corporation to a limited liability company was expected to improve commercial viability. Yet, observers maintain that meaningful reform will depend on governance discipline, independent auditing and measurable performance benchmarks.
Meanwhile, oil market volatility remains another risk factor. Fluctuations in global crude prices, geopolitical tensions and OPEC production quotas continue to influence Nigeria’s revenue projections.
Financial experts say Nigeria must also diversify revenue sources beyond crude exports. Strengthening gas commercialization, refining capacity and local value addition could help cushion external shocks and improve net returns.
As the 2025 fiscal cycle progresses, stakeholders will be watching closely to see whether NNPCL can translate high gross revenue into sustainable profitability and tangible economic impact.
