Commission says reform will unlock trillions for federal, state and local governments amid fiscal strain….
The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has thrown its weight behind President Bola Tinubu’s new Executive Order mandating the direct remittance of oil and gas revenues into the Federation Account, describing the move as a sweeping reform that could significantly strengthen public finances.
In a statement issued Friday by its Chairman, Mohammed Shehu, the Commission characterised the directive as a firm and constitutionally anchored intervention designed to plug long-standing revenue leakages and restore transparency in the management of petroleum income.
According to Shehu, the order is rooted in Section 5 of the 1999 Constitution (as amended) and draws authority from Section 44(3), which vests ownership and control of mineral resources including oil and natural gas in the Federal Government for the collective benefit of Nigerians.
Ending Multiple Deductions
The Commission noted that prior to the directive, structural provisions within the Petroleum Industry Act created layers of deductions before revenues reached the Federation Account.
These included management fees, frontier exploration allocations and other statutory charges that, over time, significantly reduced net inflows available for distribution among the federal, state and local governments.
“Before this Executive Order, substantial Federation revenues were subjected to multiple deductions,” the statement said, adding that such practices constrained fiscal capacity across all tiers of government.
RMAFC said it had consistently called for a review of statutory and regulatory frameworks that allowed revenue retention or erosion outside the Federation Account. The matter was among issues discussed at a retreat held on February 9, 2026, in Enugu State.
With the new directive in place, the Commission believes those structural concerns have now been decisively addressed.
Fiscal Impact Could Be Significant
The reform comes at a time of mounting fiscal pressures, with governments grappling with funding demands spanning security, infrastructure, healthcare, education, energy transition and economic stabilisation.
By eliminating layered deductions and fragmented oversight, the Executive Order is expected to enhance transparency, improve cash flow predictability and reinforce fiscal federalism.
Shehu said the move also strengthens the Commission’s constitutional oversight responsibilities under Paragraph 32 of Part I of the Third Schedule to the Constitution, particularly in monitoring accruals into and disbursements from the Federation Account.
“With this Executive Order, the constitutional architecture of revenue remittance is strengthened,” he stated. “It closes structural leakages and ensures revenues due to the Federation are remitted transparently.”
Trillions in Potential Gains
Earlier projections suggest the financial implications could be substantial.
An analysis of 2025 inflows submitted to the Federation Account Allocation Committee indicates that federal, state and local governments could share an additional N14.57 trillion following the policy shift.
Based on those estimates:
- The Nigerian National Petroleum Company is projected to remit about N906.91 billion in management fees and frontier exploration funds directly to the Federation Account.
- Oil and gas royalties totalling N7.55 trillion, alongside N611.42 billion in gas flaring penalties collected by the Nigerian Upstream Petroleum Regulatory Commission, are also expected to flow straight into the account.
If fully implemented, the order could mark one of the most consequential revenue administration reforms in recent years, reshaping how Nigeria’s oil wealth is accounted for and shared.
RMAFC reaffirmed its commitment to working with relevant institutions to ensure effective execution of the directive and to safeguard the integrity of the Federation Account for the benefit of Nigerians.
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