By Ayo Ayodele
The Federal Government has approved a transition period for the implementation of direct payments by oil contractors into the Federation Account, as directed under Executive Order 9 issued by President Bola Ahmed Tinubu.
The decision was reached at the inaugural meeting of the Implementation Committee for Executive Order 9, chaired by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.
According to Edun, the transition period is intended to ensure a smooth shift to the new system without disrupting existing contractual and financing arrangements in the oil sector or undermining investor confidence.
Executive Order 9 mandates that revenues from petroleum operations—including profit oil, royalty oil and tax oil—be paid directly into the Federation Account to strengthen revenue management and safeguard public funds.
Edun said contractors will continue to remit under the current system until detailed operational guidelines are issued. A technical subcommittee has been given three weeks to develop the framework for the transition.
The subcommittee, led by the Special Adviser to the President on Energy, Mrs. Olu Verheijen, will also commence a review of the Petroleum Industry Act to address structural and fiscal issues affecting Federation revenues.
As part of the reforms, the government directed the NNPC Limited to discontinue the collection of a 30 per cent management fee and a 30 per cent frontier exploration fund deduction from profit oil and profit gas under Production Sharing Contracts. The directive takes immediate effect.
Remittances of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund have also been suspended in line with the Executive Order.
The Implementation Committee said the measures are aimed at ensuring that petroleum revenues are properly accounted for and paid into the Federation Account in accordance with constitutional provisions, while supporting the fiscal stability of federal, state and local governments.