By Our Correspondent
The administration of President Bola Ahmed Tinubu has approved a transition period to implement the direct remittance of oil and gas revenues into the Federation Account, marking a significant reform in Nigeria’s fiscal management system.
The move is aimed at ensuring that all revenues accruing from crude oil and gas operations are paid directly into the Federation Account before distribution to the federal, state, and local governments.
Under the new directive, revenue streams such as royalty oil, tax oil, profit oil, and profit gas will no longer be partially retained by the Nigerian National Petroleum Company Limited (NNPCL) or other intermediaries. Instead, they will be fully remitted to the Federation Account, in line with the government’s push for greater transparency and accountability in the management of national resources.
The approved transition period is designed to allow relevant government agencies, oil companies, and financial institutions to adjust their operational and accounting systems to comply with the new framework. This phased approach is expected to minimize disruptions in the oil sector while ensuring a smooth migration to the revised revenue remittance structure.
Government officials have described the reform as a structural correction intended to strengthen fiscal federalism and improve revenue predictability for the Federation Account Allocation Committee (FAAC). By centralizing oil revenue inflows, the administration believes the policy will reduce leakages, enhance public financial management, and increase funds available for allocation among the three tiers of government.
The decision has drawn mixed reactions from stakeholders. Transparency advocates have welcomed the initiative as a bold step toward eliminating opacity in oil revenue management. However, some industry stakeholders have expressed concerns about the potential impact on the operational flexibility of NNPCL and the funding of certain oil exploration activities.
Overall, the transition to direct oil revenue payments into the Federation Account represents a major policy shift in Nigeria’s petroleum revenue administration. If effectively implemented, it could redefine how the country manages and distributes its most critical source of public income.
