Nigeria redirects all oil and gas revenues to the Federation account as part of sweeping reform

The presidency announced on Wednesday that President Bola Tinubu signed an order directing all oil and gas revenues due to the government to be paid directly into the federation's account. This is part of a sweeping reform aimed at improving public finances.

According to the law, Nigerian National Petroleum Corporation retains 30% of the oil and gas profit for frontier exploration within inland basins. According to the presidency, these funds will be "paid into the Federation account and appropriated" by the government.

NNPC retains 30 percent of the oil and gas revenue as operating costs, and gets 30 percent of the proceeds from Production Sharing Contracts. The new directive will see all revenue?from these arrangements flowing directly into the federation's account. Instead, the company will receive management fees.

The Nigerian Upstream Petroleum Regulatory Commission will pay directly to the Federation Account all royalties, petroleum profits taxes and other statutory revenue previously collected by NUPRC. The Nigerian Midstream & Downstream Petroleum Regulatory Authority will also remit their'revenues' in full. Their cost of collection is funded by appropriations.

Tinubu’s office stated that?deductions allowed by the law? had sharply reduced oil inflows, and contributed to fiscal stress across federal, state?and local governments. The 'president' also ordered a review of the law, and set up a committee to implement the changes. Reporting by Camillus EBOH; Writing by Chijioke OHuocha, Editing by Chizu NOMIYAMA

(source: Reuters)