Oil and gas royalty earnings paid into the Federation Account rose sharply in February, climbing by nearly 88 per cent compared to January, following the enforcement of Executive Order 9, which centralises revenue collection in the sector.
Data from the Federation Account Allocation Committee, sourced from the Office of the Accountant-General of the Federation, showed that royalties increased from ₦251.18bn in January to ₦471.27bn in February. This represents a month-on-month rise of ₦220.09bn.
The revenue was generated in February but distributed among the three tiers of government in March, in line with FAAC’s sharing schedule.
The increase is being linked to the Federal Government’s new directive that places oil and gas revenue collection under a unified system coordinated by the Nigerian Revenue Service. The policy aims to eliminate leakages, improve tracking, and ensure prompt remittance of funds into the Federation Account.
Interestingly, the surge in royalty income occurred despite a slight drop in crude oil output within the same period. Industry figures indicate that average daily production declined from about 1.43 million barrels per day in January to around 1.41 million barrels per day in February due to persistent issues such as pipeline vandalism, crude theft, and operational disruptions.
Ordinarily, lower production volumes would lead to reduced royalty payments since royalties are largely tied to output. However, the February figures suggest that improved oversight, better reconciliation of volumes, and stronger pricing benchmarks may have played a more decisive role in boosting revenue than production levels.
The development has revived discussions about long-standing revenue leakages in Nigeria’s upstream petroleum sector, with analysts noting that inefficiencies in collection and monitoring may have previously deprived the government of substantial earnings.
Further details from the FAAC report show that royalties formed a significant portion of total mineral revenue for the month, underlining their importance to government finances.
In addition to royalties, the Federal Inland Revenue Service recorded strong inflows from upstream petroleum taxes. Petroleum Profit Tax contributed ₦159.99bn, while upstream Company Income Tax added ₦148.89bn. Combined with other tax sources, total FIRS collections for the period exceeded ₦1.14tn.
Executive Order 9 is part of a broader fiscal reform strategy designed to strengthen transparency and accountability in the oil and gas sector. Before the directive, multiple agencies were involved in collecting royalties and other upstream revenues, often resulting in inconsistencies and delays.
By creating a single coordinated framework for revenue collection, the government hopes to maximise returns from existing production levels while addressing concerns over under-remittance and opaque accounting practices.
Economic observers say maintaining the gains recorded in February will depend on sustained enforcement of the directive, cooperation among agencies, and continuous monitoring of compliance across the value chain.
With mounting fiscal pressures and rising debt obligations, improved performance in oil and gas revenue collection could provide a crucial boost to Nigeria’s public finances in the months ahead.
