By Franklin Adole
President Bola Ahmed Tinubu has signed an Executive Order mandating the direct remittance of key oil and gas revenues into the Federation Account, halting multiple deductions previously retained by NNPC Limited under the Petroleum Industry Act (PIA).
The order, signed pursuant to Section 5 of the 1999 Constitution (as amended), seeks to reverse what the Federal Government describes as structural leakages that have significantly reduced net oil revenue accruing to the Federal, State and Local Governments. It takes effect from February 13, 2026.
Under the directive, NNPC Limited will no longer retain 30 per cent of profit oil and profit gas as a management fee on Production Sharing Contracts, Profit Sharing Contracts and Risk Service Contracts. That revenue will now be paid directly into the Federation Account. The 30 per cent allocation of profit oil and gas to the Frontier Exploration Fund has also been discontinued, with those funds to be transferred to the Federation Account instead.
Oil and gas operators and contractors are now required to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas and any other government entitlements directly to the Federation Account. In addition, gas flare penalties will no longer be paid into the Midstream and Downstream Gas Infrastructure Fund. Proceeds from such penalties are to be remitted to the Federation Account, while any spending from the gas infrastructure fund must comply strictly with public procurement laws and regulations.
Before the Executive Order, NNPC Limited retained 20 per cent of its profits for working capital and future investments, an additional 30 per cent management fee on profit oil and profit gas, and another 30 per cent allocation to the Frontier Exploration Fund. The Federal Government argued that the layered deductions diverted a substantial share of oil and gas inflows before statutory distribution to the three tiers of government.
By eliminating the 30 per cent management fee and discontinuing the Frontier Exploration Fund allocation, the new order is expected to increase the volume of oil revenues available for distribution through the Federation Account. In practical terms, this could boost monthly allocations to federal, state and local governments, improve cash flow for budget implementation, and reduce reliance on borrowing to fund deficits.
The Presidency also cited structural concerns about NNPC Limited’s role as both concessionaire and commercial operator under Production Sharing Contracts, noting that such dual functions could create competitive distortions and weaken fiscal transparency. The Executive Order seeks to reposition the company strictly as a commercial enterprise while strengthening federal oversight of revenues derived from the nation’s mineral resources.
An implementation committee comprising the Minister of Finance and Coordinating Minister of the Economy, the Attorney-General of the Federation, the Minister of Budget and National Planning, the Minister of State for Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, and other senior officials has been established to ensure coordinated execution of the directive.
The President described the reforms as urgent, citing their implications for national budgeting, debt sustainability, economic stability and the overall well-being of Nigerians. He also indicated that the administration would undertake a broader review of the Petroleum Industry Act in consultation with stakeholders to address identified fiscal and structural concerns.