FG, STATES, LGS RECEIVE RECORD N6TN FAAC ALLOCATION IN Q3 2025 — NEITI
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By: Balogun Ibrahim
The Federal Government, states, and local governments received a total of ₦6 trillion from the Federation Account Allocation Committee (FAAC) in the third quarter of last year.
On Tuesday, the Nigeria Extractive Industries Transparency Initiative (NEITI) released an analysis of the FAAC Q3 allocation, revealing a historic surge in disbursements.
The breakdown showed that the federal government received ₦2.19 trillion, states got ₦1.97 trillion, and local governments were allocated ₦1.45 trillion.
In a statement in Abuja, NEITI’s Director of Communication & Stakeholders Management, Obiageli Onuorah, described the allocation as a record increase in federation account receipts and distributions.
The agency’s Quarterly Review noted that the ₦6 trillion total included 13 per cent payments to derivative states and represented a more than twofold increase in allocations over two years, with year-on-year quarterly FAAC disbursements in 2025 rising 55.6 per cent compared with Q3 2024.
The review further revealed that statutory revenues made up 62 per cent of the shared FAAC receipts, Value Added Tax (VAT) accounted for 34 per cent, while the Electronic Money Transfer Levy (EMTL) and augmentation from non-oil excess revenue each contributed 2 per cent.
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State distributions included funds from statutory sources, VAT, EMTL, and ecological funds, with an additional ₦100 billion provided as augmentation from the non-oil excess revenue account.
The report showed that Lagos State received the highest allocation for the quarter at ₦179.3 billion, averaging ₦59.76 billion per month. Kano State followed with ₦79.2 billion, while Rivers State came third with ₦78.8 billion.
Nasarawa State recorded the lowest allocation at ₦42.5 billion, followed by Ebonyi State with ₦42.9 billion and Ekiti State with ₦43 billion. The data indicated that Nasarawa’s average monthly allocation was ₦14.1 billion, highlighting a ₦136.8 billion gap between the highest and lowest state allocations.
NEITI noted that Lagos’ allocation of ₦179 billion was more than double the amounts received by the second- and third-highest grossing states, Kano and Rivers, respectively.
The quarterly review showed that nine oil-producing states received ₦424 billion as 13 per cent derivation revenue, significantly affecting state rankings and giving derivative states nearly half of the total FAAC allocations.
Among them, four oil-producing states Akwa Ibom, Bayelsa, Delta, and Rivers stood out, with Delta State topping the list with a revenue allocation of ₦180.68 billion.
NEITI disclosed that deductions from states’ allocations for debt servicing and other obligations amounted to ₦225.89 billion, representing a 6.5 per cent decline from the previous quarter. The average debt service ratio across states was 9.4 per cent, with individual ratios ranging from 1.5 per cent to 26.8 per cent.
About one-third of states recorded a debt service ratio below 5 per cent, while over two-thirds had ratios under 10 per cent. Ogun State led with the highest ratio at 26.8 per cent, followed closely by Lagos at 26.5 per cent, with Cross River ranking third, the report stated.
Looking ahead to Q4 2025, NEITI’s quarterly review noted early indicators showing lower average oil prices and slightly higher exchange rates compared with Q3. Average daily crude oil production in Q3 was 1.64 million barrels, falling to 1.59 million barrels per day in the first month of Q4.
The agency warned that if these trends continue, foreign exchange inflows could decline, potentially reducing distributable revenues for Q4 2025.
The NEITI report revealed that derivation revenue from the solid minerals sector was too small to be distributed to Federation Account beneficiaries, with the last distribution having taken place in August 2024.
NEITI Executive Secretary Sarkin Adar welcomed the strong remittance performance and the reduction in states’ debt burdens but cautioned that oil market volatility and optimistic budget assumptions could threaten fiscal sustainability.
To safeguard these gains and strengthen fiscal resilience, NEITI recommended publishing up-to-date balances and liabilities for key federation accounts, including the Non-Oil Excess Account, Domestic Excess Crude Account, Stabilisation Fund, Ecology Fund, and other mineral resource-linked accounts.
“The publication should include clear notes explaining FAAC transactions, refunds, net-offs, and priority project entries to improve transparency in the inflows, allocations, and disbursements from the federation accounts,” the report advised.
The review highlighted the need for consistent application of Appropriation Act benchmarks when determining monthly distributable revenues, the use of the Stabilisation Account to smooth disbursements, and the transfer of exchange gains into stabilisation buffers.
It called on the Office of the Accountant General of the Federation, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), the National Economic Council (NEC), the National Assembly, and state governments to implement the recommendations to enhance transparency, accountability, and long-term fiscal sustainability.
“While the Quarter 3 2025 FAAC results are encouraging, NEITI stresses that the data offers the government an opportunity to institutionalise prudent fiscal practices that protect the gains recorded in revenue growth and reduce vulnerability to commodity shocks,” Adar said.
“The Q3 2025 FAAC outcomes are positive, but windfalls must be managed with discipline. Greater transparency, realistic budgeting, and stronger stabilisation mechanisms will ensure these resources deliver lasting benefits for all Nigerians,” he added.
NEITI urged governments at all levels to strengthen Nigeria’s sovereign wealth and stabilisation capacity by committing to regular contributions to the Nigeria Sovereign Wealth Fund and other stabilisation mechanisms, in line with fiscal responsibility frameworks.
The agency further advised adopting realistic budget benchmarks, including conservative crude oil production and price assumptions, to reduce implementation gaps, deficits, and debt levels.
It also called for accelerated revenue diversification through reforms to attract investment into the mining sector, expedited legislation to modernise the Mineral and Mining Act, support for downstream petroleum sector reforms, and full implementation of the Petroleum Industry Act (PIA) to expand domestic refining and value addition.
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