Part Two.

The Journey of a Dollar

Before a single dollar from oil reaches the Central Bank of Nigeria, it has to survive a journey that nobody has drawn on a single map.

That is not an accident. The journey passes through institutions with competing interests, informal arrangements with no legal basis, and deduction mechanisms that have never been fully audited. Each stage takes something. By the time the dollar completes the journey, if it completes the journey, it is a smaller dollar than the one that started.

Understanding this journey is the only way to understand why Nigeria can pump oil worth billions and still find its reserves under pressure. The oil is real. The earnings are real. But between the oil and the reserve figure sits a system that was built, in part, to intercept what passes through it.

Think of the oil dollar as moving through five rooms. In the first room, it is earned at the wellhead. In the second, it arrives in NNPC's account, not the government's. In the third, deductions are applied. The management fee. The joint venture costs. The frontier fund. The implicit subsidy. In the fourth, what remains reaches the Federation Account, where federal, state, and local governments share it. In the fifth, whatever portion the CBN receives is considered for reserves. Every room takes something before the next room sees it. By the time the dollar reaches the fifth room, it has already had several owners, several claims made against it, and several points at which it could disappear without public explanation.

The journey begins at the wellhead.

Nigeria sells crude oil to refineries in Europe and Asia. Payment arrives in a dollar-denominated account. Not the CBN's account. Not the Federation Account where government revenues are shared. NNPC's account. The Nigerian National Petroleum Company receives the dollar first.

In February 2026, President Tinubu signed Executive Order 9 to change this. The order directed that oil and gas revenues, royalty oil, tax oil, profit oil, profit gas, must go directly into the Federation Account for sharing, instead of passing through NNPC first. Tinubu did not merely change accounting. He changed who touches Nigeria's oil money first.

The order was also a direct challenge to the Petroleum Industry Act, the legislation that gave NNPC the right to retain thirty percent of revenue for frontier exploration, deduct management fees, and keep portions of profit oil before remittance. An executive order overriding an Act of Parliament is constitutionally contested ground. Critics argued immediately that without an amendment by the National Assembly, the order's legal durability is uncertain.

That tension is worth sitting with. The problem this piece is describing, the interception of oil revenue before it reaches the public purse, is not invisible to government. Executive Order 9 is evidence that someone inside the system understands exactly what the problem is. The question the order raises is whether an executive directive can dislodge an institutional arrangement that an entire industry has been built around. The Petroleum Industry Act has beneficiaries. Those beneficiaries have lawyers. Laws are not only legal documents. They are revenue arrangements.

This matters because it tells you the fundamental conflict is not between those who understand the problem and those who don't. It is between federal cash control and NNPC operational autonomy. Between transparency and retained revenue discretion. Between an executive order and an Act of Parliament that the National Assembly, with its own relationships to the oil industry, has not moved to amend.

This is the problem before the deductions begin.

The first deduction is the management fee. NNPC charges itself, and therefore the government, a fee for managing the oil business. Critics have argued this fee has no clear legal basis under the Petroleum Industry Act. It has been charged anyway.

The second deduction is joint venture cash calls. Nigeria co-owns most of its oil fields with international oil companies. Operating those fields costs money. Nigeria's share of those costs comes off the top before revenue is counted.

The third deduction is the Frontier Exploration Fund. A portion of revenue is set aside for exploring new oil fields. Whether this money reaches that purpose consistently is a question Nigerian Senate committees have raised repeatedly without receiving a satisfying answer.

The fourth deduction is the one with the most political history. Fuel subsidies. Nigeria imports refined petrol because it cannot refine enough of its own crude. For years, the government subsidised the price of that petrol for consumers.

In May 2023, President Tinubu announced the subsidy was gone. International creditors applauded. The World Bank endorsed the reform.

The subsidy did not disappear.

It changed its name.

NNPC continues to import refined petrol. It continues to sell that petrol at prices that, for much of the period since the announcement, have not fully reflected the actual import cost. The difference between what it costs to import the petrol and what NNPC charges for it has to be absorbed somewhere. It is absorbed in NNPC's accounts. It does not appear in the budget as a subsidy. It appears, or fails to appear, in NNPC's financial statements as a cost that reduces what flows to the government.

Analysts estimated this implicit, renamed subsidy cost Nigeria at least $3 to $5 billion in foreign exchange in 2025 alone. The exact figure is opaque because NNPC does not publish a full account of its import and pricing operations. The Senate has called for audits. Reports have been commissioned. The full picture has not appeared.

After all of that, what remains reaches the Federation Account.

The Federation Account is where Nigeria's oil revenues are distributed between the federal government, the thirty-six states, and local governments. It is the formal channel. It is the point at which the dollar, now reduced by everything that came before it, enters the official government system.

But by the time it arrives there, something important has already happened. In its public reporting, NNPC has disclosed revenue in the tens of trillions of naira while retaining a much smaller figure as profit. That gap, between what came in and what was passed on, represents costs, taxes, and obligations that are only partially transparent. Some of those costs are legitimate operating expenses. Many are not fully explained. None are consolidated in a single public document that an ordinary Nigerian can read and verify.

The NNPC is not a transparent institution. It is a parallel economy, running alongside the official government budget, operating under its own logic, with its own relationship to accountability. What it receives and what it passes on are not the same number. Some obligations never appear in the federal budget at all. They exist only inside NNPC's internal accounting structure. Crude-for-product swaps, off-budget subsidy absorption, domestic crude obligations whose settlement terms are not public. Across decades, the cumulative gap runs into tens, and potentially hundreds, of billions of dollars.

And that is before the oil is even pumped correctly.

In 2024 and 2025, Nigeria consistently failed to meet its OPEC production quota. The allocation was between 1.5 and 1.8 million barrels per day. Nigeria was producing roughly 1.3 to 1.4 million. Every single day, the gap between what Nigeria was supposed to produce and what it actually produced represented lost revenue.

The reasons for that gap are not mysterious. Pipeline vandalism. Oil theft at industrial scale. Years of underinvestment in production infrastructure. Communities along the Niger Delta that have seen oil wealth extracted from beneath their land for decades without receiving meaningful development in return, and that have, in various ways, responded to that arrangement.

A 2025 report by the Senate Committee on Petroleum Resources estimated that Nigeria loses 200,000 barrels per day to theft alone. At 2025 average prices, that is roughly $5.8 billion a year. Every year. Leaving the system before it enters any account, before any deduction is applied, before any government sees it.

Here is what that means for the conversation about reserves.

When a politician or economist refers to Nigeria's oil windfall, the extra revenue generated when oil prices rise above the budget benchmark, they are describing a gain relative to expectations. But that gain is not a bonus on top of a healthy baseline. It is a partial recovery of what the system is already losing.

The windfall does not fill a gap. It partially closes one that never stops widening.

The windfall and the losses are running simultaneously, in opposite directions.

Every deduction has a human translation. When less revenue reaches the Federation Account, states delay salaries. Local governments cancel projects. Roads remain unfinished. Hospitals run without equipment. Inflation becomes a tax on people who never saw the oil money in the first place. The distance between the wellhead and Grace's kitchen is measured not only in geography but in every room the dollar passed through before it stopped existing as public money.

So when you hear that oil earnings are up, the correct mental adjustment is not: Nigeria has more dollars. It is: more dollars entered a system that was already draining them before they arrived.

There is a question that took me a while to frame correctly, and when I framed it I understood the whole problem differently.

Of every dollar that Nigeria's oil earns, how much actually reaches the public purse?

Not what NNPC projects. Not what the budget assumes. What arrives, verified, audited, accounted for, available for distribution.

I looked for a complete answer. NNPC has published annual reports with revenue figures. The Senate has published committee reports with estimates. The IMF and World Bank have modelled remittance flows in their Nigeria assessments. None of these sources, individually or together, produce a single reconciled number that traces the full journey from oil sale to Federation Account in a form that can be independently verified.

That gap is not accidental. An institution that fully accounted for every dollar from wellhead to government would have no discretion over what happens in between. The opacity is the operating condition, not a reporting failure waiting to be corrected.

The public debate focuses on how much Nigeria earns. The hidden question is how much survives the journey.

The reserve figure you are shown is the number that survived. It is not the number that started.

Grace is still buying rice in cups. The connection between her kitchen and the oil wells of the Niger Delta runs through every deduction described in this piece. Each one takes something. Each one is invisible in the headline number. Each one has beneficiaries who have no interest in the journey becoming legible.

In Part Three, we follow the dollar that does arrive at the CBN. Because surviving the journey is not the end of the pressure. It is the beginning of a different kind.

The Number That Lies, a four-part investigation into Nigeria's foreign reserves. 

Part One: The Misunderstanding. 

Part Two: The Journey of a Dollar. 

Part Three: Where the Dollar Goes After It Arrives. 

Part Four: What Would Actually Have to Change.