Tinubu Orders Direct Remittance Of Oil & Gas Revenues To Federation Account
Executive Order Targets Revenue Leakages
PRESIDENT Bola Tinubu has signed an Executive Order mandating the direct remittance of oil and gas revenues into the Federation Account, in a sweeping move to plug leakages and strengthen public finances.
The directive, announced in Abuja through a statement by Presidential Spokesperson Bayo Onanuga, is anchored on Section 5 and Section 44(3) of the Constitution, which vest control of mineral resources in the Federal Government.
According to the President, the order seeks to restore revenue entitlements of the three tiers of government that were altered following the enactment of the Petroleum Industry Act (PIA) in 2021.
Scrapping Multiple Deductions
Tinubu criticised provisions under the current framework that allow NNPC Limited to retain significant portions of oil revenue.
Under the PIA, NNPC Ltd. keeps 30 per cent of Federation oil revenue as a management fee on Profit Oil and Profit Gas, in addition to retaining 20 per cent of its profits for working capital and future investments. Another 30 per cent is set aside for the Frontier Exploration Fund under Sections 9(4) and (5) of the Act.
The President described the extra 30 per cent management fee as unjustified and warned that the Frontier Exploration Fund risks accumulating idle cash while encouraging inefficient spending.
He also suspended payments into the Midstream and Downstream Gas Infrastructure Fund (MDGIF), noting that gas flaring penalties were already covered under an Environmental Remediation Fund created by the PIA.
Tinubu said the overlapping deductions diverted more than two-thirds of potential remittances due to the Federation Account.
Immediate Financial Reforms
Under the new order, NNPC Ltd. will no longer collect or manage the 30 per cent Frontier Exploration Fund. All profit oil and gas previously earmarked for the fund must now be transferred directly to the Federation Account.
The national oil company is also stripped of its 30 per cent management fee on profit oil and gas revenues.
Effective 13th February, all operators under production sharing contracts must pay royalty oil, tax oil, profit oil, profit gas and other related revenues directly into the Federation Account.
Proceeds from gas flaring penalties will also be remitted to the Federation Account, while any spending from the MDGIF must comply strictly with public procurement regulations.
Oversight and Implementation
Tinubu approved the establishment of an Implementation Committee to oversee execution of the reforms. Members include the Minister of Finance and Coordinating Minister of the Economy, the Attorney-General of the Federation, the Minister of Budget and National Planning, the Minister of State for Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, and other key officials.
The Director-General of the Budget Office of the Federation will serve as secretariat.
The President said the reforms are urgent in view of their implications for national budgeting, debt sustainability and economic stability, adding that a comprehensive review of the PIA will follow in consultation with stakeholders.
