Tinubu Signs Law to Force All Oil Revenue Into Federation Account
By Patience Ikpeme
President Bola Ahmed Tinubu has signed a new Executive Order to change how money from Nigeria’s oil and gas is collected and shared.
This new law is meant to make sure that every kobo earned from our oil goes directly into the government’s main pocket, known as the Federation Account, as the Nigerian Constitution requires.
The Ministry of Finance explained on Wednesday that this move is necessary to bring transparency and stop confusion in the oil sector. According to a statement from the Ministry, “The Order seeks to strengthen fiscal transparency, clarify regulatory mandates, and enhance revenues accruing to the Federation from the oil and gas sector.”
Before now, certain rules under the Petroleum Industry Act (PIA) of 2021 allowed some oil money to be taken out or spent before reaching the government. This resulted in what is called “off-budget” spending, where money is used without proper approval. To fix this, the President has stopped the Nigerian National Petroleum Company Limited (NNPCL) from collecting certain “management fees” and “frontier exploration fees.”
Also, companies that have oil contracts with Nigeria must now pay their taxes and royalties directly to the proper government offices instead of going through other channels. The President also stopped the payment of gas flare fines into a special gas fund for now.
The Ministry of Finance noted that these changes are urgent because the money coming into the government’s account from oil and gas has been dropping, even though Nigeria is producing more oil and prices are good in the market.
“The Order has become both necessary and urgent considering the sustained decline in oil and gas revenue inflows into the Federation Account, despite improvements in production levels and favourable market conditions. This shortfall has constrained the government’s capacity to meet budgetary obligations and to finance critical public investments in education, healthcare, and infrastructure,” the Ministry said.
The government pointed out that with many young Nigerians looking for jobs, better schools, and good hospitals, the country cannot afford to waste or lose any money from its oil. The new rules also clearly state the different jobs of the oil regulators (NUPRC and NMDPRA) so that investors will not be confused about who to talk to.
To make sure these new rules work perfectly, the Minister of Finance and Coordinating Minister of the Economy will lead a special committee to oversee the changes.
The government believes that the main job of the oil sector and the national oil company is to turn Nigeria’s oil into money that helps everyone. This new Executive Order starts immediately and will stay in place until the National Assembly can make these changes permanent in the law.
