Nigeria is now channeling all proceeds from oil and gas production to a single federal account as it aims to strengthen the central government budget and ensure a more effective distribution of income, Nigerian President Bola Ahmed Tinubu has said.
The oil industry has been Nigeria’s main budget income for decades.
However, overlapping funds have not allowed a fair and transparent revenue collection and subsequent distribution of the money to fund healthcare, education, and stabilize the economy, the president said in an X post.
“For too long, excessive deductions, overlapping funds, and structural distortions in the oil and gas sector have weakened remittances to the Federation Account. When revenues meant for federal, state, and local governments are trapped in layers of charges and retention mechanisms, development suffers. That must end,” Tinubu wrote.
Following a presidential executive order, all Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and other government entitlements under Production Sharing and related contracts will now be paid directly into the so-called Federation Account, the president noted.
“The additional 30 per cent management fee and the 30 per cent Frontier Exploration deduction will no longer stand in the way of national revenue,” according to Tinubu.
“Oil and gas revenues must serve the Nigerian people first and this reform is about fairness and fiscal responsibility,” he added.
The state oil and gas firm NNPC Limited will operate strictly as a commercial enterprise, as intended under law, the president said, adding that “The era of duplicative deductions and fragmented oversight is over.”
Tinubu’s administration will also carry out a full review of the Petroleum Industry Act currently in force, to address potential structural and fiscal issues that weaken national revenues from the industry.
The executive order was announced just as reports emerged that Nigeria’s struggles to pump to its OPEC+ quota over the past year have resulted in a loss of $1.31 billion in gross revenue for the biggest African oil producer.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
