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 national revenue, curbing leakages, and eliminating duplicative deductions in Nigeria’s petroleum sector.
The Executive Order, signed pursuant to Section 5 of the 1999 Constitution (as amended), seeks to safeguard oil and gas revenues, reduce wasteful spending, and ensure that funds due to the Federal, State, and Local Governments are fully remitted for national development.
According to the President, the order is anchored on Section 44(3) of the Constitution, which vests ownership and control of all mineral resources in the Government of the Federation.
“This reform is of urgent national importance, given its implications for national budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians,” Tinubu said.
The directive is intended to restore constitutional revenue entitlements that were eroded following the implementation of the Petroleum Industry Act in 2021.
The Federal Government said the Act created structural and legal mechanisms through which substantial Federation revenues were lost through multiple deductions, charges, and fees.
Under the existing framework, NNPC Limited retained 30 per cent of Federation oil revenues as management fees on profit oil and gas from production sharing, profit sharing, and risk service contracts, in addition to retaining 20 per cent of its profits for working capital and future investments.
The President said the additional management fee was unjustified.
“Given the existing 20 per cent retention, the additional 30 per cent management fee is not supported by any commercial or operational necessity and undermines revenues due to the Federation,” he said.
President Tinubu also ordered an end to NNPC Limited’s control of the 30 per cent Frontier Exploration Fund, noting that a fund of that size devoted to speculative exploration risked inefficiency and idle cash accumulation at a time of pressing national needs.
“Government resources are urgently required for core national priorities, including security, education, healthcare, and energy transition investments,” the President said.
The Executive Order further suspends payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund, citing duplication with an existing Environmental Remediation Fund already established under the PIA.
Effective February 13, 2026, all operators and contractors under production sharing contracts are required to pay royalty oil, tax oil, profit oil, profit gas, and any other government entitlements directly into the Federation Account.
President Tinubu also directed that NNPC Limited be repositioned strictly as a commercial enterprise.
“The existing structure creates competitive distortions and weakens the transition of NNPC Limited into a fully commercial operator, as envisaged under the Petroleum Industry Act,” he said.
To ensure coordinated execution, the President approved the establishment of an inter-ministerial implementation committee to oversee the effective rollout of the Executive Order.
He added that his administration would undertake a comprehensive review of the Petroleum Industry Act, in consultation with stakeholders, to address identified fiscal and structural anomalies.