Wayne Lumbasi
President Bola Tinubu has ordered that all revenues generated from Nigeria’s oil and gas sector be paid directly into the Federation Account, marking one of the most significant fiscal reforms in the country’s petroleum industry in recent years. The directive, issued through an executive order, is designed to end longstanding deductions and revenue retentions that reduced the amount of funds shared among federal, state and local governments.
Under the new policy, the Nigerian National Petroleum Company Limited will no longer retain portions of profit oil and profit gas for management fees before remitting proceeds to the government. Instead, all such revenues must now be transferred directly into the Federation Account, the central pool from which statutory allocations are distributed across the country’s three tiers of government.
The reform also affects regulatory agencies and other entities operating within the petroleum sector. Royalties, petroleum profit taxes, gas revenues and related income streams that were previously subject to deductions or internal allocations will now be remitted in full. The move effectively restructured revenue flows established under the Petroleum Industry Act, which had introduced funding mechanisms allowing certain institutions to retain a percentage of oil earnings.
The presidency said the decision was taken to strengthen public finances, eliminate leakages and ensure that constitutionally mandated revenues reach the Federation Account without delay .Officials indicated that the changes are expected to improve cash flow to sub-national governments at a time when many states face mounting fiscal pressures and rising public expenditure demands.
An implementation committee comprising key government officials has been constituted to oversee the transition to the new framework and ensure compliance across the industry. The committee is expected to work with relevant agencies and operators to align existing contracts and operational structures with the revised revenue remittance system.
Nigeria, Africa’s largest oil producer, relies heavily on hydrocarbon exports for government income and foreign exchange earnings. By mandating direct remittance of all oil and gas proceeds into the Federation Account, the administration aims to reinforce transparency, strengthen revenue accountability and stabilize national budgeting.
The reform represents a decisive intervention in the management of Nigeria’s petroleum wealth and signals the government’s intention to tighten oversight of one of the country’s most critical economic sectors.
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