FAAC Receives 100% Profit Oil as Tinubu’s Executive Order Takes Effect
The Federation Account Allocation Committee (FAAC) received 100 percent of profit oil from Production Sharing Contracts (PSCs) remitted by the Nigerian National Petroleum Company Limited (NNPC Ltd) in February, marking the first full implementation of the executive order issued by President Bola Ahmed Tinubu.
Documents detailing the February oil and gas revenue distribution, seen by the Cable on Saturday, showed that the full profit oil generated from PSC operations was paid directly into the federation account for allocation among the three tiers of government.
The development follows the executive directive by Tinubu aimed at restructuring oil revenue remittances and strengthening transparency in Nigeria’s petroleum revenue management.
Production Sharing Contracts are arrangements in which the federal government partners with international oil companies for offshore oil exploration and production.
Under the framework, the contractor recovers production costs from a portion of the crude produced, while the remaining output — known as profit oil — is shared between the government and the contractor based on agreed ratios.
Industry analysts say the remittance of 100 percent of profit oil to the federation account reflects the operationalisation of Tinubu’s order mandating the direct transfer of proceeds from PSCs to the national treasury, rather than through intermediary deductions.
The move is expected to boost revenue available for distribution by FAAC to the federal, state and local governments at a time Nigeria continues to grapple with fiscal pressures and growing public expenditure obligations.
Officials familiar with the figures said the change could significantly increase monthly allocations to subnational governments if sustained, particularly as offshore crude production under PSC arrangements accounts for a substantial share of Nigeria’s oil output.
The February remittance represents a shift from previous arrangements where parts of the proceeds from PSC operations were retained for operational adjustments before transfers to the federation account.
Further details of the revenue distribution are expected to emerge when FAAC formally releases the full breakdown of allocations for the month.