By Abiola Olawale
The Federal Government has officially commenced the implementation of the Executive Order mandating the direct remittance of oil revenues to the Federation Account Allocation Committee (FAAC).
This move, said to be aimed at enhancing transparency and stabilizing the nation’s revenue stream, marks the end of the previous system where the Nigerian National Petroleum Company Limited (NNPCL) deducted operational costs before remitting the balance.
This was announced in a press statement issued by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy.
“In line with the President’s directive, NNPC Limited shall cease, with immediate effect, the collection of the 30% management fee and the 30% frontier exploration fund deductions from profit oil and profit gas under Production Sharing Contracts (PSCs),” the statement reads.
“Additionally, all remittances of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF) are suspended with immediate effect, in line with the Executive Order.”
On Section 2(3) of the order, which provides for direct payments by contractors into the federation account, Edun said the committee agreed that the transition must be implemented in a manner that respects existing contractual and financing arrangements, and maintains investor confidence.
“For this reason, the Committee approved a defined transition period for the operationalisation of direct payments by contractors of profit oil, royalty oil, and tax oil into the Federation Account,” the minister said.
“Until the Committee issues detailed guidelines, contractors will continue to remit under the current process. During the transition period, the Committee will issue clear, standardised guidance to ensure an orderly changeover.”
He said the committee approved the establishment of a technical subcommittee to develop detailed transition guidelines within three weeks and commence a review of the Petroleum Industry Act (PIA) to address structural and fiscal anomalies that weaken federation revenues.
“The Technical Subcommittee will be led by the Special Adviser to the President on Energy, and will include the Solicitor-General of the Federation and Permanent Secretary Federal Ministry of Justice, the Chairman of the Nigeria Revenue Service, and the Chairman of the Forum of Commissioners of Finance, representatives of the Minister of State Petroleum Resources, Oil, with secretarial support from the Budget Office of the Federation,” Edun said.
He added that the committee will continue to provide coordinated guidance and timely updates as implementation progresses, commending stakeholders for their cooperation in advancing efforts to ensure that Nigeria’s petroleum resources deliver measurable benefits to citizens across the federation.
