…Sets Up Committee to Oversee Direct Oil Remittances to FAAC
By Jeremy Fregene
The Federal Government has commenced full implementation of Executive Order 9, mandating the direct remittance of oil revenues into the Federation Account, a move expected to significantly alter the revenue framework of the Nigerian National Petroleum Company Limited (NNPCL).
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who chairs the Executive Order Implementation Committee, disclosed this after the committee’s inaugural meeting. The reforms were directed by President Bola Tinubu as part of broader fiscal restructuring efforts.
Edun said the President had made it clear that all revenues accruing to the Federation must be handled transparently and managed in a manner that safeguards public funds. He assured stakeholders that while the reforms would be rigorously implemented, investor confidence and contractual obligations would be respected.
Under the new directive, the NNPCL has been instructed to discontinue the collection of the 30 percent management fee and the 30 percent frontier exploration fund deductions from profit oil and profit gas under Production Sharing Contracts (PSCs). The Executive Order also suspends remittances of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF) with immediate effect.
On the issue of direct payments by contractors into the Federation Account, Edun explained that the transition would be carefully managed to honour existing contractual and financing arrangements. He noted that contractors would continue remitting under the current structure pending the issuance of detailed operational guidelines.
To ensure a smooth transition, a technical subcommittee has been constituted to develop comprehensive guidelines within three weeks. The panel will also review relevant provisions of the Petroleum Industry Act (PIA) to address structural and fiscal gaps impacting Federation revenues.
According to Edun, the reforms are designed to ensure that Nigeria’s petroleum resources translate into measurable benefits for citizens nationwide. He added that the government would provide coordinated guidance and periodic updates as implementation progresses.
The subcommittee will be chaired by the Special Adviser to the President on Energy and comprises the Solicitor-General of the Federation, the Chairman of the Nigeria Revenue Service, the Chairman of the Forum of Commissioners of Finance, representatives of the Minister of State for Petroleum Resources (Oil), while the Budget Office of the Federation will serve as secretariat.
President Tinubu had earlier signed the Executive Order on direct revenue remittance to the Federation Account, a decision widely seen as curbing multiple income streams previously retained by the NNPCL under PSC arrangements.
However, the policy has drawn criticism from the Petroleum and Natural Gas Senior Staff Association of Nigeria, which condemned the Executive Order and called for its withdrawal, warning of potential implications for the oil and gas sector.