The Federation Account Allocation Committee (FAAC) has received 100 percent of profit oil from Production Sharing Contracts (PSCs). Following the implementation of a new executive order by Bola Ahmed Tinubu.
According to the February oil and gas revenue distribution report obtained by TheCable. The Nigerian National Petroleum Company Limited (NNPC Ltd) remitted the full profit oil proceeds from PSC operations directly to FAAC.
Major Shift in Oil Revenue Allocation
This development marks a significant shift in how oil revenues are distributed in Nigeria, as profit oil from PSCs now fully credited to the federation account for distribution among the federal, state, and local governments.
Production Sharing Contracts are arrangements where international oil companies partner with the Nigerian government. To explore and produce crude oil, sharing profits after production costs deducted.
Tinubu’s Executive Order
The policy change stems from an executive order signed by President Tinubu. This aimed at increasing transparency and boosting government revenue from Nigeria’s oil sector. By directing that the full profit oil paid into FAAC. The government hopes to ensure that all tiers of government benefit directly from oil proceeds.
Impact on Government Revenue
Analysts say the move could significantly increase funds available for monthly allocations to states and local governments. Especially at a time when many subnational governments are facing fiscal pressure.
With oil still a major contributor to Nigeria’s revenue, the decision expected to influence future FAAC distributions and potentially improve public spending capacity across the country.
