The Nigerian Economic Summit Group (NESG) has voiced concern over the underwhelming output of the oil and gas sector, warning that the situation poses serious risks to the successful execution of Nigeria’s 2025 federal budget.
In its newly released report titled “NESG 2025Q1 GDP Alert,” the think tank highlighted that crude oil production during the first quarter fell significantly short of the government’s target of 2.06 million barrels per day.
“Persistent slowdown in the oil and gas sector poses a threat to the execution of the 2025 budget,” the group noted.
“In 2025Q1, the average crude oil production is significantly below the budget benchmark of 2.06mbpd, translating to lost oil revenues needed to implement the budget.”
According to NESG, Nigeria must urgently tackle sector challenges such as ageing infrastructure, pipeline vandalism, crude theft, and security threats, including the kidnapping of foreign oil workers.
The group, however, acknowledged the steady recovery in the refining segment: “Persistent improvement in the Oil refining sector is remarkable,” NESG noted.
It stressed the importance of restoring and supporting state-owned refineries to sustain growth in refining capacity.
“The emergence of Dangote Refinery has been a game-changer for Nigeria’s oil and gas sector, reversing more than half a decade of contraction in the Oil refining sector and slashing import bills on petrol by about 53 per cent (year-on-year) in 2025Q1. This suggests the need to support privately owned refineries and incentivise investments into the downstream oil and gas sector,” NESG noted.
NESG also lauded recent improvements in capturing informal sector activities following the GDP rebasing. It emphasised the need to encourage informal players to formalise operations.
“An example is the new tax laws, which, when implemented on January 1, 2026, will reduce the value-added tax (VAT) burden for many small and medium-sized enterprises. This could prompt voluntary business registration and reduce the pervasive incidence of business closures nationwide.”
However, NESG warned of potential inflationary pressures stemming from weaknesses in agriculture, particularly livestock farming.
“The rebasing exercise has significantly increased the share of the Livestock subsector in total Agricultural GDP from 4.8 per cent in 2024Q1 (using the old base year) to 16.1 per cent in 2024Q1 and 13.4 per cent in 2025Q1 (using the new base year), attributed to the improved capture of informal activities. This suggests the need to address incessant communal clashes between the farmers and the herders to enhance crop and livestock production, with downward pressures on food inflation,” NESG noted.
Recall that the National Bureau of Statistics recently reported that Nigeria’s GDP was N372.8 trillion in 2024, after the base year for calculations was shifted to 2019, offering a more accurate representation of economic activity.
