Oil-producing states in Nigeria have received a total of N2.85 trillion in 13 per cent derivation revenue between 2022 and 2024, according to findings based on an analysis of state budget implementation reports.
Despite the significant revenue inflow, concerns persist over rising domestic debt levels, which stood at N1.34 trillion as of the third quarter of 2024, according to data from the Debt Management Office (DMO).
The eight beneficiary states—Akwa Ibom, Bayelsa, Delta, Edo, Ondo, Rivers, Imo, and Abia—received the funds as part of Nigeria’s constitutional derivation principle, designed to compensate oil-producing regions for the economic and environmental impact of crude oil extraction. While the revenue allocations have increased, many of these states continue to struggle with mounting financial obligations, raising questions about the effective utilization of the funds.
Delta State emerged as the highest recipient, receiving N1.14 trillion over the period. The state’s derivation revenue stood at N296.63 billion in 2022, increased to N331.45 billion in 2023, and further jumped to N515.09 billion in 2024—a 55.4 per cent increase in just one year.
Akwa Ibom followed with N659.21 billion while Rivers State secured N438.63 billion in total revenue.
Bayelsa received N327.42 billion, Imo got N79.87 billion, Edo received N87.52 billion, Ondo’s share stood at N73.66 billion and Abia received N17.32 billion.
Despite these allocations, debt accumulation remains a major concern. The DMO data revealed that Rivers and Delta states recorded the most significant increases in domestic debt. Rivers State’s debt surged from N225.51 billion in Q3 2022 to N389.20 billion in Q3 2024—an increase of N163.69 billion. Delta’s debt also climbed from N272.61 billion to N342.53 billion, marking a N69.92 billion rise.
Speaking on the financial outlook, John S. Onojah, Acting Director of the Financial Policy and Regulation Department at the CBN, stated:
“This review is expected to accelerate the deployment of ATMs across the country and ensure that appropriate charges are applied by financial institutions to consumers of the service.”
While some states have managed to reduce their debt burden, the financial management of these resources remains a subject of scrutiny. Akwa Ibom saw a notable debt reduction from N219.62 billion in 2022 to N126 billion in 2024, while Bayelsa, Edo, Ondo, and Imo also reported declines in their domestic debt profiles.
The rising debt levels in some of the oil-producing states have raised questions about fiscal prudence, transparency, and the impact of these funds on infrastructure and public service delivery.
Despite the steady increase in crude oil production, Nigeria has yet to meet its OPEC production quota with output fluctuating throughout 2024.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that daily crude production averaged 1.484 million barrels per day (mbpd) in December 2024, falling short of the 2mbpd target set for the coming year.
Efforts by the Federal Government to combat oil theft and pipeline vandalism have contributed to a more stable production environment.
However, analysts warn that without improved fiscal responsibility, increased revenue alone will not address the underlying economic challenges facing these states.
As oil-producing states continue to receive allocations, stakeholders are calling for greater accountability and transparency in fund utilization to ensure that revenues translate into tangible development, improved public services and long-term economic sustainability.
