By Bassey Udo
Amid expectations that the Executive Order issued by President Bola Tinubu last week on the management of petroleum industry revenue management would yield increased revenue to the Federation Account, Minister of State for Finance, Dr Doris Uzoka-Anite, has sued for prudence and financial discipline by the Federation Account Allocation Committee (FAAC) in the management and disbursement of the accruals.
Uzoka-Anite, who is also the Chairman of FAAC, said in Abuja on Friday at the opening of the FAAC meeting for February 2026 that the government believes the EO was not only a structural fiscal correction to restore constitutional discipline to petroleum revenue management, but also to strengthen inflows to the Federation Account.
She hailed the EO as part of the reforms by the government to safeguard federation oil and gas revenues and provide regulatory clarity, to reinforce revenue discipline and reduce leakages.
Besides, the Minister said the EO would not only address long-standing concerns about off-budget deductions, retained management fees, diversion of gas flare penalties, but also correct the issue of fragmented remittance structures.
Specifically, the Minister said the EO suspends the 30% allocation to the Frontier Exploration Fund (FEF) and the 30% management fee on profit oil and profit gas payable to NNPC Limited; directs that gas flare penalties be paid into the Federation Account, while mandating full remittance of petroleum revenues without unconstitutional deductions.
Highlighting a fundamental shift from a retention-based oil revenue model to a gross remittance, Federation-first model, the Minister said the expected outcomes include
broader tax base, improved compliance, and enhanced administrative efficiency in tax management as well as more profit oil and profit gas direct inflow into the Federation Account.
While gas flare penalties under the new arrangement would become distributable revenue, the Minister said previously retained management fees would henceforth no longer reduce revenues that should be remitted to the Federation Account.
The impact of the EO, she said, would be higher monthly gross inflows into the Federation Account and increased Federal, State and Local Government allocations from FAAC as well as higher 13% derivation transfers to oil-producing states and improved cash flow across the three tiers of government.
She said the ongoing audit of the Frontier Exploration Fund, the Midstream & Downstream Gas Infrastructure Fund, and NNPC management fee deductions may result in recoveries of additional funds that could provide a one-off fiscal boost to the Federation Account.
Despite the expected increased inflows, the Minister urged FAAC members to ensure financial prudence and fiscal discipline by managing the excess liquidity responsibly.
“Sudden liquidity injections across all tiers of government — if not carefully handled — can generate excess aggregate demand, exchange rate pressures, asset price distortions, and inflationary risks,” she said, adding that the task before FAAC was not only to distribute revenues, but to safeguard macroeconomic stability in the economy.
She proffered five proposals to provide safety valves against inflationary pressures, including phased disbursement of one-off recoveries, by considering staggered FAAC distribution rather than a single bulk injection and temporarily warehousing a portion in a stabilization buffer.
Also, she stressed the need to strengthen the Excess Crude/Stabilization buffer mechanism, by ensuring FAAC channels part of the incremental inflows into a fiscal stabilization window to offset revenue shortfalls in weaker months, while reducing procyclical spending to build resilience.
Besides, the Minister underscored the importance of coordination between the fiscal and monetary authorities to align fiscal injections with liquidity management tools; support open market operations where required; avoid destabilizing money supply expansion.
In addition, she called for States and Federal ministries, departments and agencies to be
encouraged on productive capital deployment, by prioritizing capital expenditure over recurrent expansion; investing in infrastructure, agriculture, energy, and productive sectors, while avoiding unsustainable wage or consumption spikes.
To strengthen transparency and reporting, Dr Uzoka-Anite proposed the introduction of monthly revenue transparency dashboards by FAAC; production-to-remittance reconciliation reporting, and establishment of a template for clear reporting of incremental tax reforms and EO-driven inflows.
Acknowledging the strategic opportunities offered by the issuance of the EO and the tax reforms to deepen fiscal federalism, enhance distributable revenue, restore constitutional clarity, and to strengthen trust among tiers of government, the Minister said FAAC must ensure that the increased revenue must not translate into fiscal complacency.
She urged members to resist the temptation to treat incremental inflows as permanent windfalls, rather they should reduce debt burdens, by clearing arrears responsibly, building buffers, and invest in growth-enhancing sectors.
