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By Chukwuma Umeorah
Capital Market Academics of Nigeria (CMAN) have said that the recent executive order by President Bola Tinubu directing the remittance of a larger share of oil and gas proceeds from Production Sharing Contracts (PSCs) to the Federation Account could strengthen liquidity in Nigeria’s capital market by increasing fiscal inflows to all tiers of government and supporting broader economic activity.
The President of CMAN, Prof. Uche Uwaleke in a statement commended President Tinubu for restoring 60 per cent of the proceeds from profit oil and gas under PSCs to the Federation Account, describing the decision as a step toward improving transparency and equity in revenue distribution.
According to Uwaleke, “higher statutory allocations to the Federal, State and Local Governments through the Federation Accounts Allocation Committee (FAAC) could translate into increased public spending, infrastructure financing and economic activities that ultimately deepen market liquidity and investment flows within the capital market.”
CMAN noted that since the implementation of the Petroleum Industry Act (PIA) in 2021, the Federation Account had received 40 per cent of PSC proceeds, while the Nigerian National Petroleum Company Limited (NNPCL) retained 60 per cent through the Frontier Exploration Fund and management-related charges. It argued that the revised remittance structure corrects what it described as an imbalance in the sharing of national resource revenues.
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Uwaleke stated, “This marks one of the most courageous reforms of his administration and a decisive step toward strengthening fiscal transparency and equity in revenue distribution,” adding that the adjustment would ensure that all tiers of government benefit more equitably from oil and gas wealth.
The Association further observed that stronger fiscal inflows to government could enhance the capacity of subnational entities to fund projects, service obligations and participate more actively in the domestic debt and equity markets, thereby improving overall market depth and liquidity. They also stressed that as a limited liability company, the NNPCL should operate independently on its internally generated revenues rather than relying on public funds, noting that the policy direction reinforces corporate governance expectations under the post-PIA framework.
While backing the executive order, CMAN called for the continuation of reforms, particularly the inclusion of Joint Venture (JV) assets in the remittance structure to the Federation Account, to further strengthen fiscal transparency and revenue accountability.
Uwaleke added that the development represents a positive outcome for FAAC and fiscal justice, stating that increased distributable revenues could enhance government spending, stimulate economic activities and indirectly support capital market growth.
CMAN also recommended that the Chairman of the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) be included in the committee overseeing the implementation of the executive order to ensure transparency and accountability in the remittance process.
