President Bola Tinubu has signed an Executive Order mandating the direct remittance of oil and gas revenues to the Federation Account, in a sweeping reform aimed at boosting government earnings, curbing leakages and eliminating duplicative structures within the petroleum sector.
The directive, signed pursuant to Section 5 of the 1999 Constitution (as amended), is anchored on Section 44(3), which vests ownership and control of mineral resources in the Government of the Federation.
According to a statement issued Wednesday by the President’s Adviser on Information and Strategy, Bayo Onanuga, the Executive Order seeks to restore the constitutional revenue entitlements of the Federal, State and Local Governments, which the administration believes were significantly eroded under the Petroleum Industry Act (PIA) framework.
Under the new Order, Nigerian National Petroleum Company Limited (NNPC) will no longer collect and manage the 30 per cent Frontier Exploration Fund derived from profit oil and profit gas under Production Sharing Contracts, Profit Sharing Contracts and Risk Service Contracts.
The Order also removes the company’s entitlement to the 30 per cent management fee on profit oil and profit gas revenues, directing that such funds be paid directly into the Federation Account.
In addition, all operators and contractors holding oil and gas assets under production sharing contracts are now required, effective February 13, 2026, to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas and any other government entitlements directly to the Federation Account.
The President also suspended payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Proceeds from such penalties will henceforth be paid into the Federation Account, while expenditures from the MDGIF must comply strictly with extant public procurement laws and regulations.
The Federal Government argued that existing deductions under the PIA—including NNPCL’s 20 per cent retention for working capital and future investments, alongside the additional 30 per cent management fee and 30 per cent frontier exploration allocation—far exceed global norms and significantly reduce remittances to the Federation.
The administration maintained that large allocations to speculative exploration risk creating idle cash balances and inefficient spending at a time when resources are urgently needed for security, education, healthcare and energy transition investments.
The Executive Order also addresses what the President described as structural concerns arising from NNPCL’s dual role as both concessionaire and commercial entity under Production Sharing Contracts, a framework seen as capable of creating competitive distortions and undermining transparency.
Tinubu affirmed that the reforms are of urgent national importance, citing their implications for national budgeting, debt sustainability, economic stability and the overall well-being of Nigerians.
He also indicated that his administration would undertake a comprehensive review of the Petroleum Industry Act in consultation with relevant stakeholders to address fiscal and structural anomalies identified in its implementation.
To ensure effective implementation, the President approved the establishment of an inter-ministerial implementation committee. Members include 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 are 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 to the committee.
The Executive Order has already been gazetted.
Byline
Deji Elumoye in Abuja
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