Tinubu’s Oil Revenue Order Will Boost FAAC Allocations, Says Uzoka-Anite

Tinubu’s Oil Revenue Order Will Boost FAAC Allocations, Says Uzoka-Anite

JOEL OLADELE, Abuja

The Minister of State for Finance, Doris Uzoka-Anite, has commended President Bola Ahmed Tinubu for issuing an executive order mandating the direct remittance of certain oil sector revenues into the Federation Account, describing it as a major step toward boosting FAAC allocations and strengthening fiscal discipline.

Uzoka-Anite spoke in Abuja on Friday while addressing members of the Federation Account Allocation Committee (FAAC), according to a statement signed on Saturday by the Assistant Director, Information and Public Relations, Amadi Uloma Nneka, of the Federal Ministry of Finance.

The Minister said the February 13 executive order would safeguard oil and gas revenues, provide regulatory clarity and significantly increase funds accruing to the Federation Account for distribution among the three tiers of government.

She described the move as a structural fiscal correction designed to restore constitutional discipline to petroleum revenue management and enhance distributable income for federal, state and local governments.

Uzoka-Anite explained that the order suspends the 30 per cent allocation to the Frontier Exploration Fund (FEF) and halts the 30 per cent management fee on oil and gas profit payable to NNPC Limited.

It also mandates that gas flare penalties be paid into the Federation Account and directs full remittance of petroleum revenues without unconstitutional deductions.

“The implications for FAAC are very significant. More oil and gas profit will now flow directly into the Federation Account. Gas flare penalties will become distributable revenue, and previously retained management fees will no longer reduce remittable inflows,” she said.

According to the Minister, the reform marks a shift from a retention-based oil revenue model to a gross remittance, federation-first approach.

She added that a retrospective audit of the Frontier Exploration Fund, midstream and downstream gas infrastructure accounts, as well as NNPC management fee deductions, could lead to recoveries that may provide a one-off fiscal boost.

Uzoka-Anite noted that the overall revenue outlook was improving due to structural reforms introduced by the Federal Government, including newly implemented tax reforms aimed at broadening the tax base, improving compliance and enhancing administrative efficiency.

However, she cautioned against the risks associated with sudden liquidity injections into the economy.

“Experience shows that when revenues rise sharply and are distributed fully and immediately, large liquidity injections can increase inflationary pressures, complicate monetary management and reduce the real purchasing power of allocations,” she warned.

To mitigate such risks, the Minister proposed phased disbursement of one-off recoveries and recommended that a portion of incremental inflows be temporarily warehoused in a stabilisation buffer.

She also suggested strengthening the excess crude and stabilisation buffer mechanisms to offset revenue shortfalls in weaker months and reduce procyclicality in spending.

Uzoka-Anite said enhanced coordination with the Central Bank of Nigeria would be pursued to align fiscal injections with liquidity management tools and support open market operations where necessary.

She urged states and Ministries, Departments and Agencies (MDAs) to prioritise capital expenditure over recurrent expansion, stressing the need for investment in infrastructure, agriculture, energy and other productive sectors.

“Productive spending expands supply capacity and mitigates inflation,” she said.

The Minister also announced plans to introduce monthly revenue transparency dashboards, production-to-remittance reconciliation reporting and clearer disclosure of incremental inflows arising from tax reforms and the executive order.

She emphasised that prudent management of the anticipated revenue gains would be critical to ensuring sustainable growth and macroeconomic stability.