 |
| Asiwaju Bola Ahmed Tinubu |
President Bola Ahmed Tinubu’s administration has declared a major reduction in Nigeria’s traditional reliance on crude oil revenues, framing it as evidence of a broader economic transformation under the Renewed Hope Agenda. Speaking through Vice President Kashim Shettima at the fifth anniversary of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in Abuja on Tuesday, October 6, 2026, the President positioned the oil and gas sector not as the sole engine of growth but as a critical enabler of diversification into agriculture, manufacturing, digital, and creative industries.
“These gains matter well beyond the oil and gas industry. Under the Renewed Hope Agenda, we are building a diversified economy in which agriculture, manufacturing, the digital and creative industries all play their part,” the President stated. “We have already reduced our dependence on oil revenue, and we intend to go further. But a diversified economy still needs energy, foreign exchange and investment, and that is where this sector serves the nation. Our gas can power homes and factories. Petroleum earnings support a stable naira and help fund the Federation.”
The remarks came as NUPRC marked five years since its creation under the landmark Petroleum Industry Act (PIA) of 2021, which ended decades of regulatory uncertainty and introduced clearer rules for upstream operations, host community benefits, and fiscal terms. Shettima credited the joint efforts of security agencies, operators, host communities, and the Commission for steadier oil production and a return of investors who had previously sought opportunities elsewhere. Nigeria, he noted, has ranked first among Africa’s leading destinations for upstream investment for two consecutive years.
RELATED
◼︎ PETROAN Urges Tinubu to Restore Nigeria’s Government-Owned Refineries Before 2027 Elections
From Oil Boom to Fiscal Vulnerability
Nigeria’s economy has long been defined by oil. Following the commercial discovery at Oloibiri in 1956 and the boom of the 1970s, petroleum revenues came to dominate government finances, often accounting for 70–80 percent or more of federation revenues in peak years. This single-resource dependence exposed the country to boom-bust cycles tied to global prices, currency volatility, and production disruptions from theft, sabotage, and underinvestment in the Niger Delta.
By the mid-2010s, the vulnerabilities were stark. Oil price collapses and rising theft reduced output and revenues. Successive governments talked of diversification, but progress was uneven. Non-oil sectors grew in absolute terms, yet oil still shaped fiscal planning, foreign exchange availability, and political economy dynamics. The PIA of 2021 represented a structural break: it unbundled the old Nigerian National Petroleum Corporation, created independent regulators like NUPRC for upstream activities, introduced host community development trusts, and sought to make fiscal terms more competitive.
Under Tinubu, elected in 2023, additional reforms—removal of petrol subsidies, foreign exchange market liberalization, and targeted upstream incentives—have aimed to restore commercial viability and investor confidence. These measures have been painful in the short term, contributing to inflation and cost-of-living pressures, but they have also improved transparency and market signals.
Evidence of Reduced Oil Dependence
Independent analyses support the claim of declining relative dependence on oil. A report by Quartus Economics noted that oil’s share of federation revenues has fallen from roughly three-quarters in the pre-2014 period to about one-quarter in recent years. Tax revenues, particularly non-oil taxes, have risen sharply, accounting for as much as 87 percent of total federation revenues in some assessments for 2024. Between 2023 and 2025, Nigeria generated substantial tax revenues, with the non-oil sector contributing the majority.
This shift reflects improved tax administration, growth in services and other non-oil activities, and higher receipts from value-added tax and company income taxes. Non-oil export earnings have also set records in some recent periods. However, oil and gas remain vital for foreign exchange generation and for funding the Federation Account that supports federal, state, and local governments. Absolute oil revenues still matter enormously; production shortfalls or price drops continue to create fiscal pressures, as seen in budget performance data showing oil revenue often lagging targets.
Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, highlighted Nigeria’s current standing: production of about 1.7 million barrels per day and reserves exceeding 37 billion barrels. He stressed the need for more investment, additional licensing rounds, and intensified exploration to unlock full potential. Recent NUPRC data show reserves at approximately 37.01 billion barrels of oil and condensate as of early 2026, with gas reserves rising to over 215 trillion cubic feet.
Average production in 2025 hovered around 1.6 million barrels per day (including condensate in some tallies), with peaks higher and improved compliance with OPEC quotas compared to earlier years of heavy theft losses.
MORE RELATED
◼︎ NLC Demands Urgent Action as Petrol Price Hits ₦1,500 Per Litre
◼︎ NLC and Civil Servants Demand ₦500 Petrol Price and ₦500,000 Minimum Wage Amid Rising Hardship
Investment Rebound and the “Decade of Gas”
The claim of leading African upstream investment finds backing in industry data. Wood Mackenzie reported that Nigeria attracted significant capital in 2025 despite an overall decline in Sub-Saharan African upstream spending, securing a notable share of final investment decisions (FIDs). Over recent years, the country has captured a much larger portion of continental FIDs than in the 2015–2023 period. NUPRC has approved numerous Field Development Plans representing tens of billions in potential investment, and 22 major offshore projects are in the pipeline. A new 2026 licensing round offering 40 blocks was announced around the anniversary events.
Shettima emphasized transparency gains, noting that acreages are now awarded through open competitive processes—citing a personal anecdote of a friend securing a block without political connections. He also pointed to host community projects benefiting more than 170 communities in education, healthcare, and other areas selected by the communities themselves.
The President declared this “the decade of Gas,” committing to an energy transition that is “just and suited to Nigeria’s needs.” With Africa’s largest gas reserves, the plan is to expand supply for power, industry, and clean cooking, reduce flaring and methane emissions, and grow renewables alongside hydrocarbons. Gas is positioned to power industrialization while petroleum earnings stabilize the naira and fund the federation. A well-run upstream sector, the administration argues, will create jobs for Nigerian engineers, fabricators, and service companies rather than merely extracting rents.
Accountability, Challenges, and the Road Ahead
Tinubu vowed continued focus on compliance and accountability. Operators receiving incentives must deliver on work programmes, local content, environmental standards, and host community obligations. The Commission itself must account publicly for performance. The government pledged to uphold the rule of law and the sanctity of contracts to minimize and quickly resolve disputes.
NUPRC Governing Board Chairman Senator Magnus Abe described the Commission’s creation under the PIA as evidence of progress in sector reform. Yet challenges persist. Production remains well below historical peaks and official targets of 2 million barrels per day in the near term and 3 million by 2030.
Infrastructure integrity, security in the Niger Delta (improved but not eliminated), contracting delays, and the global energy transition all constrain growth. Accountability concerns have also surfaced, including calls from civil society groups for better tracking of certain oil-related funds.
Critics note that while relative dependence on oil revenues has declined, the economy remains vulnerable: oil still drives a large share of export earnings, and non-oil growth has not yet fully translated into broad-based job creation or poverty reduction at the scale needed for Nigeria’s large and young population. Diversification successes in digital services, creative industries (Nollywood, music), and agriculture are real but unevenly distributed.
Samuel O. Sulaimon is the founder and Editor-in-Chief of Naijapiz. He covers News, Sports, Finance, Faiths, Education, Technology.
Post a Comment