Nigeria’s fiscal watchdog has thrown its weight behind a sweeping reform that could tighten the country’s revenue taps and reshape how oil wealth reaches governments at all levels.
The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) said the Executive Order by President Bola Ahmed Tinubu mandating direct remittance of oil and gas earnings into the Federation Account marks a decisive shift from a system long dogged by opaque deductions and fragmented oversight.
In a statement issued Friday, RMAFC Chairman, Dr. Mohammed Shehu, framed the policy as more than a procedural tweak, describing it as a structural reset designed to restore constitutional discipline in revenue management and improve the predictability of funds shared by federal, state, and local governments.
According to the Commission, the order, grounded in Sections 5 and 44(3) of the 1999 Constitution, reasserted federal ownership and control of mineral resources while tightening the pathway through which proceeds flow into the national purse.
RMAFC argued that prior arrangements under the Petroleum Industry Act allowed multiple deductions, ranging from management fees to frontier exploration allocations, that cumulatively reduced what ultimately reached the Federation Account. These layers, the Commission noted, weakened fiscal capacity across tiers of government and complicated oversight.
The Commission linked the reform to its long-standing push to plug statutory loopholes that enabled revenue retention outside constitutionally recognised channels. It referenced deliberations at a policy retreat held in Enugu on February 9, 2026, where stakeholders examined persistent leakages in oil revenue administration, issues the new order now seeks to confront head-on.
Beyond transparency, the Commission said the directive could ease mounting fiscal pressures tied to security spending, infrastructure financing, healthcare delivery, education funding and the country’s energy transition agenda. By standardising remittances and reducing discretionary deductions, the reform is expected to improve cash flow planning and strengthen fiscal federalism.
Shehu said the policy would also sharpen the Commission’s constitutional role in tracking accruals to and disbursements from the Federation Account, enhancing monitoring capacity under the Third Schedule of the Constitution.
RMAFC pledged to collaborate with relevant institutions to ensure effective implementation, stressing that the credibility of public finance reforms ultimately depends on strict compliance and transparent reporting.
For Nigeria’s revenue governance architecture, the Commission suggested, the order signals a move from reform rhetoric to enforceable fiscal discipline, an outcome many public finance observers have long demanded.
However, the Federal, state, and local governments are poised to share an estimated N14.57 trillion in additional revenue following a new Executive Order by Tinubu mandating that royalty oil, tax oil, profit oil, profit gas, and related proceeds from production sharing, profit sharing, and risk service contracts be paid directly into the Federation Account. The projection is based on an analysis of 2025 revenue inflows drawn from monthly submissions to the Federation Account Allocation Committee.
Data from 2025 remittances indicate that the Nigerian National Petroleum Company Limited is expected to remit about N906.91bn in management fees and frontier exploration funds, while oil and gas royalties amounting to N7.55tn and gas flaring penalties of N611.42bn collected by the Nigerian Upstream Petroleum Regulatory Commission will now flow straight into the Federation Account.
Under the directive, the Federal Inland Revenue Service will no longer collect Petroleum Profits Tax and Hydrocarbon Tax, which generated N4.905tn in 2025. In addition, the Midstream and Downstream Gas Infrastructure Fund recorded N596.61bn within the same period, bringing the total value of revenue streams affected by the order to about N14.57tn.
The Executive Order, which took effect on February 13, 2026, also abolishes the 30 per cent Frontier Exploration Fund under the Petroleum Industry Act and ends the 30 per cent management fee on profit oil and gas previously retained by NNPC Limited. The policy, issued pursuant to Sections 5 and 44(3) of the Constitution, is aimed at tightening revenue management and boosting inflows into the Federation Account.
