The Nigerian National Petroleum Company Limited (NNPC) has reported a combined N801.3 billion from Management Fees and Frontier Exploration Funds within the first nine months of 2025, representing 56.5 per cent of the N1.42 trillion budgeted for both streams this year.

The data, drawn from the company’s September 2025 revenue and distribution report to the Federation Accounts Allocation Committee (FAAC), indicated that each of the two categories recorded N400.667 billion in the period under review.

Both items are derived from 30 per cent apiece of the profit oil and gas under the Production Sharing Contract (PSC) arrangements.

While the figures suggested modest progress, they also exposed a significant shortfall against projections as each of the two lines showed a variance of N264.4 billion below expectation for the first three quarters of the year, reflecting the wider fiscal pressures confronting the oil and gas sector despite production recovery efforts.

The NNPC management fee, a charge representing the corporation’s entitlement from managing PSCs on behalf of the federation, recorded a variance of N132.233 of its annual projection. The same applied to the frontier exploration fund, a dedicated pool for financing hydrocarbon search and development in underexplored or virgin basins across the country.

However, the N801.3 billion combined inflow nonetheless signalled a measure of consistency in upstream cash generation through PSCs, which have become the backbone of Nigeria’s crude output in recent years.

Besides, a breakdown of the NNPC report to FAAC showed that year-to-date the company distributed N1.335 trillion from PSC operations to FAAC over the nine-month period, against an annual budget of N2.368 trillion.

This translated to 56.3 per cent performance, leaving a deficit of over N440 billion in the nine months under consideration. Out of this, 30 per cent went to NNPC’s management fee, another 30 per cent to the frontier exploration fund, and the remaining 40 per cent as the federation’s direct share.

This means that for every N100 earned from PSC profits, N30 was retained by the company as its management entitlement, N30 was set aside for frontier exploration, and N40 was remitted into the federation account.

However, the pace of remittance highlights the slow rebound of Nigeria’s upstream output and the continued gap between target and actual production. Average crude oil output in 2025 has hovered around 1.6 million barrels per day, below the official benchmark of 2.06 million bpd in the country’s budget for this year.

The frontier exploration fund, in particular, continues to attract attention given its strategic role in expanding Nigeria’s reserve base. Statutorily, it is managed by NNPC to finance exploration in frontier basins such as the Chad, Bida, Sokoto, Dahomey, and Benue troughs.

The N400.6 billion mobilized for that purpose so far is expected to support seismic and appraisal activities in those basins through the final quarter of the year, although issues remain as to the deployment of these funds.

The NNPC’s September FAAC snapshot further showed that the Federation’s 40 per cent PSC share amounted to N710.52 billion for the nine months, while total PSC distribution stood at N1.776 trillion.

With three months left in the fiscal year, NNPC faces the challenge of closing the gap between budget and actual inflows. If current trends persist, the company may end 2025 with roughly half of what was projected at the start of the year.

Besides, whether the last quarter’s performance will tilt the balance closer to target will depend largely on stability in production, crude prices, and continued efficiency in PSC administration. (THISDAY)