A burgeoning dispute between the Federal Government of Nigeria and Oyo State Governor Seyi Makinde regarding dividends from Nigeria LNG Limited (NLNG) has brought critical attention to the nation's gas revenue management. The controversy also highlights the distribution of these proceeds to states and local government areas, raising serious questions about whether all funds rightfully due to subnational governments have been comprehensively accounted for, as reported by Daily Trust.
Conflicting Claims Over Billions in NLNG Dividends
The core of the disagreement revolves around two starkly different financial positions. The Presidency asserts that the Federation Account has received a total of $21.5 billion in NLNG dividends over the past 25 years, with less than $3 billion of this amount recorded since President Bola Tinubu assumed office. This statement, issued by presidential spokesman Bayo Onanuga, explicitly dismissed Governor Makinde's claim of an "NLNG dividend windfall" being withheld as false.
Conversely, Governor Makinde maintains that an N9 trillion accumulated shortfall is owed to states and local governments. This figure, according to the Governor, emerged from a reconciliation exercise commissioned by the Nigeria Governors' Forum (NGF). He stressed that this amount represents historical underpayments rather than a single, immediate dividend payment expected by each state. The Governor specifically stated that if each state were to receive N250 billion as a "one-off distribution," the total would reach N9 trillion, excluding allocations for the Federal Government, the Federal Capital Territory, and the 774 local councils nationwide. The Presidency, however, reiterates that NLNG has never made a $25 billion dividend payment to the Federation Account in a single transaction.
This escalating disagreement has ignited fresh inquiries into several critical areas:
- The total volume of dividends disbursed by NLNG.
- The exact share accruing to the Federation Account.
- The specific formula employed for revenue distribution.
- Whether past payments were accurately recorded in the relevant financial accounts.
Energy sector stakeholders have also expressed apprehension regarding documentation, transparency, and the imperative to determine if the alleged shortfall is due to an accounting discrepancy, an outstanding obligation, or a differing interpretation of the revenue-sharing framework.
NLNG's Financial Performance and Shareholder Structure
This high-profile dispute unfolds as NLNG continues to expand its operations and solidify its standing in the global liquefied natural gas market. According to its "Facts and Figures 2026" publication, NLNG has generated $149.6 billion in revenue since its inception. The company has paid $47.2 billion in dividends to its shareholders and remitted $10.8 billion in taxes to the Federal Government since achieving tax compliance in 2009.
NLNG operates with four key shareholders: the Nigerian National Petroleum Company Limited (NNPC Ltd), which holds a 49 per cent stake; Shell, with 25.6 per cent; TotalEnergies, holding 15 per cent; and Eni, owning 10.4 per cent. It is crucial to note that the Federation's 49 per cent interest is managed through NNPC Ltd. Therefore, the $21.5 billion figure cited by the Presidency refers specifically to the amount attributable to the Federation's interest, not the company's cumulative dividend payments to all its shareholders, who collectively account for the remaining 51 per cent.
The Genesis of the N9 Trillion Shortfall Claim
Governor Makinde firmly disputes the Presidency’s interpretation of the figures, asserting that the N9 trillion claim stems from accumulated underpayments identified during a comprehensive reconciliation exercise between the Federal Government and the Nigeria Governors' Forum. According to his account, this exercise was initiated to ascertain the full extent of NLNG dividend payments and to verify if the amounts due to states and local governments had been fully accounted for. The Governor stated:
“The Nigeria Governors’ Forum (NGF), with the Federal Government’s support, engaged a consultant to reconcile NLNG dividend payments. The exercise identified a shortfall of about N9 trillion due to states and local governments. The Federal Government accepted the findings. The report remains in the custody of both the Federal Government and the NGF.”
On Monday, Governor Makinde reiterated his insistence that the Federal Government is withholding N250 billion in NLNG dividends from each state across the country.
Constitutional Mandate and Historical Audit Concerns
Section 162(1) of the 1999 Constitution mandates that revenues collected by the Federal Government be paid into the Federation Account, subject to constitutional provisions governing revenue collection and distribution. This account serves as the central pool from which allocations are made to the Federal Government, state governments, and local governments under established revenue-sharing arrangements. For NLNG dividends attributable to the Federation, key questions arise regarding when these proceeds were remitted, how they were recorded, and how the distributable revenue was treated under the relevant agreements. Observers argue that the constitutional principle of pooling and distributing revenue should guide the handling of NLNG dividends, ensuring funds due to the Federation are not managed outside this established framework.
The ongoing dispute has also reignited concerns about the historical management of NLNG dividend payments. A 2015 audit by the Nigeria Extractive Industries Transparency Initiative (NEITI) reportedly discovered that $11.6 billion paid by NLNG to NNPC had not been remitted to the Federation Account. This finding raised significant questions about the treatment of these proceeds and whether funds accruing to the Federation had been retained or utilised for other purposes before being transferred to the statutory allocation account. NEITI later confirmed that NNPC began directly remitting dividends into the Federation Account from 2016 or 2017.
Stakeholder Calls for Transparency and Publication of Reconciliation Report
Rasheed Adeleke, an energy sector expert, highlighted that the management and distribution of NLNG revenue are safeguarded by several statutory bodies, including the constitutional framework, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), NEITI, the Federation Account Allocation Committee (FAAC), and the National Assembly. These structures, he explained, are designed to ensure that public revenue is properly recorded, accounted for, and distributed in accordance with the law. However, Mr. Adeleke noted that the current disagreement has been exacerbated by "poor documentation," which "shouldn’t have reared its ugly head in the first place."
Dr. Ayodele Oni, another oil and gas expert, echoed the call for transparency, stating that a reconciliation report must be published. "Neither side has yet produced the documents that would end the argument. The truth is in the dividend ledger, the Federation Account statements, and the FAAC schedules. In my view, this is a record question dressed up as a political fight. A publication of the reconciliation report will end the dispute," he asserted.
An unnamed source familiar with NLNG operations suggested that the exchange between the Presidency and Governor Makinde might have political undertones, especially given the timing of the dispute ahead of the 2027 general elections. The source questioned why the issue has only recently gained prominence, despite the long-standing questions surrounding NLNG dividends and their distribution. "The fact that the crisis didn’t gain momentum several months ago shows there is more to it than meets the eye. The issue had been there before now without much prominence. Why did the two presidential candidates draw battle lines over NLNG dividends a few months before the 2027 general elections?" the stakeholder queried. Another source revealed that clarity regarding NLNG dividend payouts has been lacking, particularly since the end of the Buhari administration, leading to uncertainty under the current Tinubu administration and potentially explaining Governor Makinde's claims.