Tinubu’s Oil Earnings Order Will Boost FAAC Revenue, Says Uzoka-Anite
The Honourable Minister of State for Finance, Dr. Doris Uzoka-Anite has commended President Bola Ahmed Tinubu’s executive order on oil earnings remittance, saying it will boost FAAC revenue and promote fiscal discipline.
Dr Uzoka-Anite disclosed this in Abuja on Friday while addressing members of the Federation Account Allocation Committee (FAAC), urging States, Ministries, Departments and Agencies (MDAs) of Government to prioritise capital expenditure over recurrent expansion.
The Minister lauded the Order which mandated direct remittance of certain oil sector revenues to the Federation Account, stating that the presidential executive order would safeguard oil and gas revenues.
She explained that it1pppp wlould also provide regulatory clarity and significantly strengthen revenues accruing to the Federation Account
The Minister described the development as a structural fiscal correction aimed at restoring constitutional discipline to petroleum revenue management and enhancing distributable income across the three tiers of government.
Uzoka-Anite who disclosed that the revenue outlook was improving due to ongoing structural reforms introduced by the Federal Government, added that
the newly implemented tax reform measures are broadening the tax base, improving compliance, and enhancing administrative efficiency.
*Also, the executive order signed by Mr President on February 13 is reinforcing revenue discipline in the oil and gas sector and reducing leakages,* She said.
According to her, the directive suspends the 30% allocation to the Frontier Exploration Fund, the 30% management fee to NNPC on oil and gas profit payable to NNPC Limited. It also directed that gas flare penalties be paid into the federation account, and mandated full remittance of petroleum revenues without unconstitutional deductions.
The Minister highlighted that the reform marks a shift from a retention-based oil revenue model to a gross remittance, federation-first model.
*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.
Uzoka-Anite emphasised that the reforms were expected not only to result in higher monthly gross inflows into the federation account but also, increased allocations to federal, state and local governments.
She said that a retrospective audit of the FFF, the Midstream and Downstream Gas Infrastructure was due, and NNPC management fee deductions could lead to recoveries that may provide a one-off fiscal boost.
In a statement by Amadi Uloma, Assistant Director, Information and Public Relations in the Minister, while welcoming the improved revenue outlook, the Minister cautioned against the risks associated with sudden liquidity injections.
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 stated that excess aggregate demand, exchange rate pressure, asset price distortions, and inflationary risks could arise if increased inflows were not carefully managed.
To mitigate such risks, the Minister proposed phased disbursement of one-off recoveries and suggested that retrospective recoveries be staggered rather than injected into the economy in bulk, with a portion temporarily warehoused in a stabilisation buffer.
She also recommended that the excess crude and stabilisation buffer mechanism be
strengthened to channel part of incremental inflows into a fiscal stabilisation window, noting that “This could offset revenue shortfalls in weaker months and reduce procyclicality in spending”
Uzoka-Anite pointed out that enhanced coordination with the CBN would be pursued to align fiscal injections with liquidity management tools and support open market operations where necessary, calling for investment in infrastructure, agriculture, energy and other productive sectors, as well as avoiding unsustainable wage or consumption spikes.
“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 clear reporting of incremental inflows arising from tax reforms and the executive order.
She emphasized prudent management of increased revenue, urging states and MDAs to prioritize capital expenditure over recurrent expansion, investing in infrastructure and productive sectors to drive growth and mitigate inflation.
