ABUJA, Nigeria — The South-South Governors Forum (SSGF) has officially endorsed President Bola Tinubu’s Executive Order mandating the direct remittance of all oil and gas revenues to the Federation Account, describing it as a historic reform in Nigeria’s petroleum sector.
Senator Douye Diri, Chairman of the SSGF and Governor of Bayelsa State, hailed the order as a decisive step toward transparency, fiscal accountability, and constitutional integrity in the management of Nigeria’s hydrocarbon resources.
Ending Opaque Deductions and Frontier Exploration Fund
For decades, the Nigerian National Petroleum Company Limited (NNPCL) deducted operational costs, levies, and the controversial 30 percent Frontier Exploration Fund “at source” before remitting revenues to the Federation Account. Critics argued this practice obscured actual revenue and created idle cash balances outside standard appropriation processes.
The Executive Order eliminates these deductions, requiring all operators and contractors under Production Sharing Contracts (PSCs) to remit Royalty Oil, Tax Oil, and Profit Oil directly to the Federation Account. Analysts anticipate this will plug longstanding revenue leakages and improve visibility for the Budget Office and the Revenue Mobilization Allocation and Fiscal Commission (RMAFC).
Call for Petroleum Industry Act Review
The SSGF has also called for a comprehensive review of the Petroleum Industry Act (PIA). Governors highlighted structural flaws in the 2021 law, including the exclusion of state and local governments from administering the Host Communities Development Trust, which they say undermines local governance and regional stability.
“States and local councils are closest to communities; bypassing them is a recipe for crisis,” said Governor Diri.
The Forum also urged the federal government to revisit the allocation of oil revenue to host communities. While a 10 percent share was initially proposed, the current law provides only 3 percent. Governors argue that an increase would better reflect the environmental and social costs borne by oil-producing areas.
Economic and Fiscal Implications
Nigeria’s oil and gas sector remains the primary source of foreign exchange and a major contributor to the Federation Account. By streamlining remittances, the federal government expects increased liquidity for infrastructure, healthcare, and education across all 36 states.
The South-South governors described the reforms as a move toward “fiscal justice,” enabling predictable budgeting at the state level, especially for Niger Delta states managing complex ecological challenges.
As the federal government prepares to engage with the National Assembly on proposed PIA amendments, the Executive Order provides an immediate administrative fix to revenue management, while legislative review aims to address structural grievances in the oil-producing regions.
