FAAC Disburses ₦6 Trillion in Q3 2025 as Lagos and Oil States Lead Revenue Receipts
The ₦6 trillion pool was distributed among the three tiers of government
The Nigerian Federation Account recorded its highest quarterly disbursement to date in the third quarter of 2025, with total allocations reaching ₦6 trillion. This figure represents a 55.6% year-on-year increase from the same period in 2024 and indicates that total allocations have more than doubled over a 24-month period. According to the Nigerian Extractive Industries Transparency Initiative (NEITI) Quarterly Review, the surge was driven primarily by oil-linked revenues and robust Value Added Tax (VAT) collections, even as the agency warns of mounting pressure heading into the final months of the year.
Tier-Based Breakdown of Allocations
The ₦6 trillion pool was distributed among the three tiers of government according to the statutory revenue-sharing formula. The breakdown is as follows:
Federal Government: ₦2.19 trillion
State Governments: ₦1.97 trillion
Local Government Councils: ₦1.45 trillion
Statutory revenues remained the dominant source, accounting for 62% of the shared receipts, while VAT contributed 34%. Other contributors included the Electronic Money Transfer Levy (EMTL) and non-oil excess revenue augmentations, each making up 2% of the total.
State-by-State Disparities and Derivation Inflows
Allocation figures revealed significant disparities between subnational governments. Lagos State recorded the highest receipt for the quarter at ₦179.3 billion, an average monthly inflow of ₦59.76 billion. This total was more than double the receipts of Kano (₦79.2 billion) and Rivers (₦78.8 billion), which ranked second and third respectively.
Among oil-producing states, the 13% derivation fund significantly altered the fiscal landscape. A total of ₦424 billion was shared among nine oil-bearing states, with Delta State grossing the highest overall revenue at ₦180.68 billion. Other major beneficiaries of derivation include Akwa Ibom, Bayelsa, and Rivers.
Debt Sustainability and Governance Challenges
Despite the windfall, Delta State Governor Sheriff Oborevwori challenged his counterparts to ensure these funds translate into improved living standards. Speaking at the groundbreaking for the ₦39.3 billion Otovwodo flyover, Oborevwori insisted that state governments now possess sufficient resources and urged transparency in reporting revenues to the public.
NEITI data also provided insights into subnational debt management. Deductions for debt servicing totaled ₦225.89 billion, a 6.5% decline from Q2. The average debt service ratio stood at 9.4%, with ratios ranging from a low of 1.5% to a high of 26.8% (Ogun State). Notably, two-thirds of the states maintained a ratio below 10%, signaling improved fiscal sustainability at the subnational level.
Emerging Fiscal Risks for Q4 2025
NEITI has flagged potential headwinds for the fourth quarter. Early indicators show that average daily crude oil production slipped from 1.64 million barrels per day (mbpd) in Q3 to 1.59 mbpd in the first month of Q4. Coupled with softening global oil prices and slightly higher exchange rates, these factors may reduce the distributable revenue in the coming months.
Indicator Q3 2025 Average Q4 2025 (Early Month)
Crude Oil Production 1.64 mbpd 1.59 mbpd
Total FAAC Shared ₦6.00 Trillion Projected Decline
Monthly Disbursable Avg ₦2.00 Trillion ₦1.92 Trillion (Nov)
Conclusion
While the Q3 2025 FAAC disbursements represent a historic revenue milestone for Nigeria, the reliance on volatile commodity prices remains a structural vulnerability. The sharp rise in subnational allocations provides an opportunity for state-led development, provided the "softening" oil market does not trigger a significant fiscal contraction in 2026. NEITI recommends that governments institutionalize policy safeguards, including the publication of up-to-date balances in the Excess Crude and Stabilization accounts, to buffer against potential shocks.
