Nigeria’s Minister of State for Finance, Dr. Doris Uzoka-Anite, has stated that the recent executive directive signed by President Bola Tinubu is expected to significantly enhance inflows into the Federation Account Allocation Committee (FAAC), reinforcing fiscal discipline within the oil and gas sector.
Speaking during a FAAC meeting in Abuja on Friday, the minister explained that the presidential order mandates the direct remittance of specific petroleum-related revenues into the federation account, effectively curbing revenue leakages and restoring constitutional compliance in oil revenue management.
According to Uzoka-Anite, the executive action represents a fundamental fiscal adjustment designed to correct structural inefficiencies and improve distributable income for federal, state and local governments.
She emphasized that the government’s broader fiscal reform programme is already yielding positive results, with improved revenue projections linked to ongoing structural and tax reforms.
The minister noted that recent tax policy adjustments are expanding the national tax base, strengthening compliance mechanisms, and enhancing administrative effectiveness across revenue-generating agencies.
She further clarified that the executive order, signed on February 13, introduces key changes including:
- Suspension of the 30 percent allocation previously directed to the Frontier Exploration Fund (FEF).
- Suspension of the 30 percent management fee charged on oil and gas profits payable to NNPC Limited.
- Mandatory remittance of gas flare penalties directly into the federation account.
- Full remittance of petroleum revenues without unconstitutional deductions.
Uzoka-Anite described the move as a transition from a retention-based oil revenue model to a gross remittance, federation-first framework.
Under the new structure, she explained, oil and gas profits that were previously retained at source will now flow directly into the federation account, increasing distributable funds under FAAC.
She added that gas flare penalties will now qualify as shared revenue, while management fees that previously reduced remittable inflows will no longer be deducted before distribution.
The minister projected that the reforms would result in higher monthly gross inflows, strengthening fiscal allocations to all three tiers of government.
She also disclosed that a retrospective audit covering the Frontier Exploration Fund, midstream and downstream gas infrastructure funds, and NNPC management fee deductions is underway. Potential recoveries from these reviews could generate a one-off fiscal boost.
However, Uzoka-Anite cautioned against the macroeconomic risks associated with sudden liquidity surges.
She warned that rapid distribution of sharply increased revenues could elevate inflationary pressures, complicate monetary policy management, and erode the real value of allocations through exchange rate volatility and asset price distortions.
To mitigate such risks, she proposed a phased disbursement model for retrospective recoveries. Rather than injecting large sums into the economy at once, portions could be warehoused in a stabilization buffer.
The minister further recommended strengthening the excess crude and fiscal stabilization mechanisms to manage revenue volatility and reduce procyclical spending patterns.
She indicated that enhanced coordination with the Central Bank of Nigeria (CBN) would be pursued to ensure fiscal injections align with liquidity management tools and open market operations.
Uzoka-Anite urged state governments and federal Ministries, Departments and Agencies (MDAs) to prioritize capital expenditure over recurrent spending, particularly investments in infrastructure, agriculture, and energy.
She stressed that productive investments expand supply capacity and help mitigate inflationary effects.
Additionally, she announced plans to introduce monthly revenue transparency dashboards, detailed production-to-remittance reconciliation reports, and structured reporting of incremental inflows resulting from tax reforms and the executive order.
According to her, the reform provides an opportunity to deepen fiscal federalism, restore constitutional clarity in petroleum revenue management, and strengthen trust across tiers of government.
She concluded by warning against fiscal complacency, urging governments to use incremental inflows prudently by reducing debt burdens, clearing arrears responsibly, building fiscal buffers, and investing in growth-enhancing sectors.
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