Experts Bicker Over Tinubu’s Executive Order Blocking NNPCL 30% Oil Revenue Deductions

By Jeremy Fregene

A new executive order by Bola Ahmed Tinubu directing that all oil revenues be paid directly into the Federation Account has sparked a sharp debate among policy analysts, industry stakeholders and labour leaders over its fiscal, legal and operational implications.

The directive, signed on February 18 and titled Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity, 2026, removes the authority of the Nigerian National Petroleum Company Limited (NNPC Ltd) to retain a 30 percent management fee and frontier exploration fund from upstream revenues. Royalty oil, tax oil, profit oil, profit gas and other proceeds are now to be remitted directly to the Federation Account Allocation Committee (FAAC) for distribution among federal, state and local governments.

Supporters of the order describe it as a bold recalibration of Nigeria’s fiscal structure. Policy commentator Steve Otaloro argues that eliminating the 30 percent deduction will expand the revenue pool available for FAAC distribution, potentially increasing monthly allocations to states and local governments. With subnational governments grappling with revenue volatility and mounting expenditure pressures, he contends that the move could widen fiscal space for education, healthcare, infrastructure and social safety nets.

Advocates further maintain that routing oil revenues directly into the Federation Account strengthens fiscal federalism by reducing opaque deductions and improving transparency in revenue flows. They argue that clearer remittance structures may enhance investor confidence at a time when Nigeria is pursuing broader economic reforms aimed at stabilising public finances and restoring macroeconomic credibility.

However, the President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, has challenged the public framing of the policy. Speaking on Arise TV, Osifo argued that the widely cited 30 percent deduction does not apply to gross oil revenue. According to him, production sharing contract revenues undergo multiple deductions, including royalties, taxes and cost recovery, before arriving at what is classified as “profit oil” or “profit gas.” It is from that figure, he said, that the 30 percent is applied, translating in practical terms to roughly two percent of total PSC revenue.

Osifo warned that removing this portion could disrupt NNPC Ltd’s operations, noting that the retained funds contribute to salary payments and internal obligations across upstream, midstream and downstream segments. He questioned how the company would finance its operational costs under the new arrangement and cautioned that abrupt changes could unsettle the industry.

Industry stakeholders say the dispute highlights broader tensions in Nigeria’s oil governance, particularly the balance between transparency and equitable revenue sharing on one hand, and corporate autonomy and operational sustainability on the other.

Energy sector analysts note that while increased FAAC allocations could recalibrate federal-state fiscal relations, unresolved legal questions surrounding the Petroleum Industry Act may trigger litigation or policy uncertainty if not addressed through legislative channels.

Financial experts also warn that investor confidence hinges on regulatory clarity and predictability, arguing that how the executive order is implemented, and whether it aligns with existing statutory provisions, will ultimately determine its long-term impact on Nigeria’s oil and gas sector and the wider economy.