President Bola Tinubu has signed a sweeping Executive Order mandating the direct remittance of oil and gas revenues into the Federation Account, in a bold move aimed at plugging fiscal leakages, eliminating duplicative structures, and strengthening Nigeria’s public finances.
The directive, signed pursuant to Section 5 of the Constitution of the Federal Republic of Nigeria (as amended), invokes Section 44(3), which vests the ownership and control of all minerals, mineral oils, and natural gas in the Government of the Federation.
At the heart of the reform is a decisive overhaul of contentious provisions in the Petroleum Industry Act (PIA), which the Presidency says created structural channels for substantial revenue losses through layered deductions, management fees, and special-purpose funds.
Under the existing framework, NNPC Limited retains 30 percent of Federation oil revenues as a management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts. The company also withholds 20 percent of its profits for working capital and future investments.
With the 20 percent retention already in place, the Federal Government argues that the additional 30 percent management fee is unjustifiable and excessive.
Beyond that, another 30 percent of profit oil and profit gas had been earmarked for the Frontier Exploration Fund under Sections 9(4) and (5) of the PIA — a provision the Presidency describes as fiscally imprudent at a time of mounting national obligations.
The new Executive Order immediately halts these deductions. NNPC Limited will no longer collect or manage the 30 percent Frontier Exploration Fund, and all such revenues will now flow directly into the Federation Account.
Effective February 13, 2026, all operators and contractors under Production Sharing Contracts are required to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other government-entitled revenues directly to the Federation Account.
In addition, NNPC Limited will no longer be entitled to the 30 percent management fee on profit oil and profit gas revenues due to the Federation.
The Presidency maintains that these deductions, alongside other statutory charges, have diverted more than two-thirds of potential oil and gas revenues away from the Federation Account, contributing to declining net inflows and fragmented fiscal oversight.
Tinubu has also suspended payments of Gas flare Penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF), established under Section 52(7)(d) of the PIA.
Instead, all proceeds from penalties imposed on operators for gas flaring will now be paid directly into the Federation Account. Expenditures from the MDGIF will henceforth comply strictly with public procurement laws and financial regulations.
The move addresses concerns over overlapping mandates, as Section 103 of the PIA had already created a dedicated Environmental Remediation Fund administered by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), funded by levies on lessees to rehabilitate impacted communities.
The President also flagged structural concerns over NNPC Limited’s dual role as concessionaire and commercial operator under Production Sharing Contracts — a framework critics argue creates competitive distortions and undermines its transition into a fully commercial enterprise as envisioned by the PIA.
To streamline operations, Tinubu approved the constitution of a joint project team to execute integrated petroleum operations, with the Commission serving as the interface with licensees and lessees where upstream and midstream operations are combined.
An Implementation Committee has been established to ensure coordinated execution of the Executive Order. The committee comprises the Minister of Finance and Coordinating Minister of the Economy; the Attorney-General of the Federation and Minister of Justice; the Minister of Budget and National Planning; and the Minister of State for Petroleum Resources (Oil).
Other members include the Chairman of the Nigeria Revenue Service, a representative of the Ministry of Justice, the Special Adviser to the President on Energy, and the Director-General of the Budget Office of the Federation, who will serve as secretary.
Tinubu described the reforms as a matter of urgent national importance, citing implications for national budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians.
He also announced that his administration will undertake a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address fiscal and structural anomalies identified in its implementation.
With oil revenues accounting for a significant share of government income, the Executive Order signals a decisive shift toward tighter fiscal discipline and enhanced transparency in Nigeria’s most critical economic sector — a move that could reshape the nation’s revenue architecture and strengthen the financial standing of federal, state, and local governments.
