The Federal Government, in a bid to safeguard Federal revenues and strengthen the management of petroleum revenue flows has commenced the implementation of Executive Order 9, which mandates the direct remittance of oil and gas revenues into the Federation Account.
Wale Edun, Nigeria’s minister of finance and coordinating minister of the economy disclosed this in a statement on Monday.
He explained that the Implementation Committee for Executive Order during a meeting last week, reaffirmed the President’s directive that revenues accruing to the Federation from petroleum operations must be handled in a manner that upholds constitutional principles, protects revenues accruable to the Federation, and supports the fiscal stability of all three tiers of government.
The minister maintained that in line with the President’s directive, the Nigerian National Petroleum Company (NNPC) Limited shall cease, with immediate effect, the collection of the 30 percent management fee and the 30 percent frontier exploration fund deductions from profit oil and profit gas under Production Sharing Contracts (PSCs).
Additionally, Edun said all remittances of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF) are suspended with immediate effect, in line with the Executive Order.
“With respect to Section 2, Sub-section 3 of the Executive Order on direct payments by contractors into the Federation Account, the Committee agreed that this transition must be implemented in a manner that respects existing contractual and financing arrangements, and maintains investor confidence.
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“For this reason, the Committee approved a defined transition period for the operationalisation of direct payments by contractors of profit oil, royalty oil, and tax oil into the Federation Account. Until the Committee issues detailed guidelines, contractors will continue to remit under the current process. During the transition period, the Committee will issue clear, standardised guidance to ensure an orderly changeover,†Edun said.
The Committee, according to him also approved the establishment of a Technical Subcommittee to develop the detailed guidelines for the transition to direct remittance within three (3) weeks, and commence a review of the Petroleum Industry Act (PIA) to address structural and fiscal anomalies that weaken Federation revenues.
Also, the technical subcommittee will be led by the Special Adviser to the President on Energy, and will include the Solicitor-General of the Federation and Permanent Secretary Federal Ministry of Justice, the Chairman of the Nigeria Revenue Service, and the Chairman of the Forum of Commissioners of Finance, representatives of the Minister of State Petroleum Resources, Oil, with secretarial support from the Budget Office of the Federation.
“The Committee will continue to provide coordinated guidance and timely updates as implementation progresses. It commends the cooperation of all stakeholders in advancing the President’s efforts to ensure that Nigeria’s petroleum resources deliver tangible, measurable benefits to citizens across the Federation,†he added.
