What You Need to Know
The Nigerian presidency announced that President Bola Tinubu has signed an order to transfer all oil and gas revenues directly to the federal account. This move is part of comprehensive reforms aimed at strengthening public finances. The Nigerian National Petroleum Corporation will retain a portion for operational costs, while other revenues will be redirected to the treasury.
Africa-Press. The Nigerian presidency announced that President Bola Tinubu has signed an order to transfer all oil and gas revenues directly to the federal account, as part of comprehensive reforms aimed at strengthening public finances.
Under the law, the Nigerian National Petroleum Corporation retains 30% of oil and gas profits to fund exploration operations in inland basins. The presidency clarified that these funds will now be transferred to the federal account and allocated by the government.
Additionally, the Nigerian National Petroleum Corporation retains 30% of oil and gas sales as operational costs and receives 30% of revenue from production-sharing contracts. Under the new directive, all revenues from these agreements will be transferred directly to the federal account, while the corporation will receive designated management fees.
Payments for royalties, oil profit taxes, and other legal revenues previously collected and retained by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will now go directly to the treasury. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) will also transfer its full revenues, with collection costs covered by financial allocations.
Tinubu’s office reported that the deductions allowed by the law have sharply reduced net oil flows, contributing to increased financial pressure on federal, state, and local governments. The president also ordered a review of the law and formed an executive committee to enforce the amendments.
The federal account in Nigeria is a central constitutional account that is distributable and managed by the Accountant General of the Federation. All government revenues, particularly from oil, taxes, and customs, are deposited into this account to be disbursed monthly across the three levels of government (federal, state, and local councils) through a federal account allocation committee.
Nigeria’s economy heavily relies on oil revenues, which have historically been a significant source of government funding. The management of these revenues has often been contentious, with various reforms aimed at improving transparency and efficiency in the distribution of funds. Recent changes under President Tinubu’s administration reflect ongoing efforts to address fiscal challenges and enhance the financial stability of the government.
The establishment of a central federal account for oil revenues is intended to streamline financial management and ensure that funds are allocated effectively across federal, state, and local governments.
