New Oil Revenue Rules to Lift FAAC Payouts, FG Says — But Warns: Spend Carefully
By: Oluwaseun Lawal
Money may soon flow a little differently. Maybe a little fuller too.
The Federal Government says its fresh tax reforms — alongside a new Presidential Executive Order on oil and gas remittances — will increase what gets shared at FAAC. More funds into the Federation Account. More to distribute to federal, state, and local governments. That’s the plan.
Speaking in Abuja at the February FAAC meeting, Minister of State for Finance, Doris Uzoka-Anite, described the changes as more than policy tweaks. According to her, it’s a reset. A fiscal correction meant to plug leakages and restore order in how petroleum revenue is handled.
For years, she explained, deductions happened before money reached the Federation Account. Off-budget charges. Retained management fees. Gas flare penalties not fully remitted. Fragmented systems. Now, the government wants a “Federation-first” approach. Gross remittance. Full payment. Then sharing.
Under the new order, the 30 per cent allocation to the Frontier Exploration Fund is suspended. The 30 per cent management fee on profit oil and gas payable to NNPC Limited is also suspended. Gas flare penalties must go straight into the Federation Account. No quiet deductions. No side routes not backed by law.
The expectation? Higher monthly inflows. Bigger FAAC distributable income. Possibly increased derivation payments to oil-producing states. And, maybe, more predictable funding for budgets across the country.
She also hinted at something else. A review of past deductions involving oil funds and management fees. If recoveries happen, it could mean a one-off financial boost. Not permanent. Just a bump.
But here’s the caution.
Uzoka-Anite warned that sudden revenue increases can create their own problems. More cash in the system can drive demand up. Exchange rate pressure. Asset price distortion. Inflation risks. We’ve seen that story before.
So the government is considering staggered disbursement if recoveries materialise. Spread it out. Possibly park part of the funds in a stabilisation buffer. Keep liquidity from flooding the economy at once.
She said coordination with the Central Bank of Nigeria will be key. Fiscal policy and monetary policy must move together, or things can get messy fast.
Her advice to states and MDAs was blunt: don’t treat higher revenue like free money. Prioritise capital projects. Infrastructure. Agriculture. Energy. Investments that expand production capacity. Avoid sharp wage spikes or unsustainable recurrent spending.
Transparency measures are also coming — monthly revenue dashboards, reconciliation reports comparing production and remittances, clearer disclosure of additional inflows. The aim, she said, is discipline. And trust.
Still, she stressed one point repeatedly: higher earnings are not permanent windfalls. Governments should reduce debt, clear obligations, build savings buffers. Because when liquidity rises too quickly, prices can rise too. And the real value of those same allocations shrinks.
In short, more money may be coming into FAAC. That’s the headline.
How it’s managed — that’s the real test.
