Budget Office Boss Accuses NNPCL Of Retaining 70% Oil Revenue, Seeks PIA Amendment

The director general of the Budget Office of the Federation, Tanimu Yakubu, has accused the Nigerian National Petroleum Company Limited (NNPCL) of retaining up to 70 per cent of Nigeria’s oil revenue under the Petroleum Industry Act (PIA) 2021, and called for an urgent amendment to the law.

Speaking at a citizens’ and stakeholders’ engagement forum organised by the Federal Ministry of Budget and Economic Planning in Abuja, Yakubu said the law granted NNPCL 30 per cent of the country’s gross oil revenue as management fees. At the same time, the federal government still covered its operational costs.

Yakubu explained that the PIA grants NNPCL 30 per cent of the country’s gross oil revenue as management fees, while the federal government still shoulders the company’s operational costs. Furthermore, an additional 30 per cent of gross oil and gas profits is allocated to the Frontier Exploration Fund, effectively allowing NNPCL to control nearly 70 per cent of Nigeria’s oil earnings.

He warned that this revenue arrangement has wreaked havoc on Nigeria’s fiscal space, significantly reducing funds available for critical infrastructure development. Yakubu emphasised that the nation’s revenue challenges stem not from oil price declines or production shortfalls, but from this structural issue in how oil revenues are distributed under the current law.

“When that law came into being, it gave NNPC Limited 30 per cent of the country’s gross oil revenue as a management fee, while still absorbing operational costs, plus another 30 per cent for the Frontier Exploration Fund. My calculations show NNPC takes not less than 70 per cent of the country’s oil revenue, which constitutes about 80 per cent of the funds financing our public infrastructure,” Yakubu stated.
Yakubu warned that the arrangement had caused “havoc” in the fiscal space, depriving the government of critical infrastructure funds. He stressed that the situation, not oil price decline or production shortfalls, was the real cause of Nigeria’s revenue dilemma.

“When that law came into being, it gave NNPC Limited 30 per cent of the country’s gross oil revenue as a management fee, 30 per cent, while still absorbing its operational costs. It gave another 30 per cent of the gross gas and oil profit as an endless endowment in favour of Frontier Exploration Fund.

“When I did the arithmetics last year, it was clear that NNPC directly or indirectly took not less than 70 per cent of Nigeria’s oil revenue. And everyone here knows that the oil revenue is about 80 per cent of the source of funds that finance public infrastructure,” the budget DG stated yesterday.” He said the decline in oil prices and not the inability to actualise the projected oil output caused the dilemma where the government has had to prioritise spending.

“And this ministry has been working earnestly to ensure this law is effected. We push, they resist, but we’re still pushing. And if this law is immediately enacted next month, the amendment will enhance our ability to pay.

“Everyone here knows that the oil revenue is about 80% of the source of funds that finance public infrastructure. This, and not the decline in oil price, caused this dilemma,” he said.

The Budget Office chief disclosed that efforts were ongoing to amend the PIA. He said once implemented, the amendment would improve the government’s ability to meet its financial obligations.
Minister of Budget and Economic Planning, Senator Atiku Bagudu, confirmed the move, noting that President Bola Tinubu had already agreed to an amendment to the Act that his immediate predecessor passed. “Today, Mr President has agreed that we should amend the Petroleum Industry Act,” Bagudu told participants at the engagement.

Earlier, statistician general of the federation and CEO of the National Bureau of Statistics, Adeyemi Adeniran called for the support of civil society organisations for his office and base their commentaries on the data from the statistics bureau on facts. “We expect a constructive engagement with government data. Prove your points with data,” he stated.

He reemphasised that CSOs and other private stakeholders should interact with statistical data either for their personal use or engage the government with facts and figures, not just based on social media comments.

The Budget Minister asked the NBS to engage the public more before releasing any major initiative to ensure the public’s buy-in, a directive Adeniran said would be carried out in the Bureau’s future operations. “We agree that we need to do more engagement. We are introducing a lot of infographics to break down data interpretation for better understanding by the people. We are also engaging more with the media,” he stated.

Minister Bagudu claimed that despite being an agency of government, the current administration does not interfere with activities, including methodology and sample sizes of the NBS or the outcome of their research. “We only encourage them to explain their methodologies and sample size to the public,” the minister said. He urged the CSOs to understand that using the official statistical figures helps them relate to national data better and accurately.

Responding to concerns raised on the delayed implementation of the 2024 and 2025 national budget by the Lead Director of the Centre for Justice is Eze Onyekpere, the DG, Budget Office said the fiscal authorities were working with the National Assembly to determine the right fiscal framework and timing for the budget, especially the extended periods for the 2024 budget which the Minister of Finance and Coordinating Minister of the Economy, Wale Edun told the Green Chanbers on Wednesday has been implemented by 80 per cent.