ABUJA, Feb 19 – Nigeria has enacted a major fiscal reform requiring all government-related oil and gas revenues to be paid directly into the federation account, marking a significant shift in the management of the country’s most critical source of public income.
The directive, signed by President Bola Tinubu, eliminates longstanding provisions that allowed key energy institutions to retain portions of oil and gas proceeds before remitting the balance to the government. The reform is designed to improve fiscal transparency, strengthen revenue collection, and enhance funding availability for federal, state, and local governments.
Under the previous framework, Nigerian National Petroleum Corporation retained significant shares of oil and gas income, including funds allocated for frontier basin exploration, operational expenses, and production sharing contract revenues. The new policy requires that these earnings be transferred in full to the federation account, with the company instead receiving government-approved allocations to cover operational and administrative costs.
The reforms also extend to industry regulators. Revenues previously held by the Nigerian Upstream Petroleum Regulatory Commission, including royalties and petroleum profit taxes, will now be fully remitted to the federation account. Similarly, the Nigerian Midstream and Downstream Petroleum Regulatory Authority will transfer all collections directly to the central pool, with operational funding provided through formal budget appropriations.
Government officials said the changes were necessary to address persistent fiscal pressures caused by revenue deductions and off-account retention practices, which had significantly reduced net inflows to public coffers. The presidency noted that restoring full remittance of oil and gas income is expected to strengthen national fiscal stability and improve budget planning across all tiers of government.
An implementation committee has been established to oversee enforcement of the directive, alongside a broader review of existing legal and regulatory provisions governing oil revenue management.
The reform represents one of the most consequential shifts in Nigeria’s oil revenue governance in decades, with the potential to significantly increase fiscal transparency, improve public sector funding, and reinforce confidence in the country’s financial management framework.
