Eshioromeh Sebastian in Abuja
President Bola Tinubu has signed an Executive Order mandating the direct remittance of all oil and gas revenues to the Federation Account.
The policy has also stripped the Nigerian National Petroleum Company Limited (NNPC Ltd.) of its statutory rights to withhold significant portions of the Federation’s earnings.
The directive, issued pursuant to Section 5 of the 1999 Constitution (as amended) and gazetted on February 13, 2026, is designed to curb what the Presidency described as “wasteful spending,” eliminate duplicative structures in the sector, and restore the full constitutional revenue entitlements of the federal, state, and local governments.
According to a statement released on Wednesday by Special Adviser on Information and Strategy, Bayo Onanuga, the President’s action is a direct response to structural and legal channels created by the Petroleum Industry Act (PIA) 2021, which the government believes has facilitated the loss of substantial Federation revenues through excessive deductions, sundry charges, and fees.
The Executive Order specifically targets several retention mechanisms currently enjoyed by NNPC Ltd. under the PIA. Key among them is the 30 per cent management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts (PSCs), Profit Sharing Contracts, and Risk Service Contracts.
The Presidency argued that this fee is “unjustified” given that NNPC Ltd. already retains 20 per cent of its profits to cover working capital and future investments. The retained earnings, the government stated, are already sufficient to support the functions NNPCL performs under these contracts.
Furthermore, the order halts NNPC Ltd.’s collection and management of the 30 per cent Frontier Exploration Fund (FEF). Hitherto, NNPC Ltd. retained 30 per cent of its profit oil and profit gas under production sharing, profit sharing, and risk service contracts as the FEF, as provided under sections 9(4) and (5) of the PIA.
The government deemed this fund a drain on resources, noting that dedicating such a large sum to “speculative exploration” risks accumulating idle cash balances and encouraging inefficient spending at a time when resources are urgently needed for security, education, healthcare, and energy transition.
Gas Flare Penalties Redirected
The order also impacts the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Payments of gas flaring penalties, which were previously channeled into the MDGIF under Section 52(7)(d) of the PIA, have been suspended. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is now directed to pay all proceeds from gas flaring penalties directly into the Federation Account.
The Presidency justified this move by pointing out that Section 103 of the PIA already establishes a dedicated Environmental Remediation Fund, administered by NUPRC, for the rehabilitation of communities impacted by gas flaring.
Direct Remittance Mandate
Effective immediately, all operators and contractors of oil and gas assets held under production sharing contracts are required to pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other interest due to the government directly into the Federation Account.
The President noted that the reforms are of “urgent national importance,” given their implications for national budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians. He has also signaled his intention to undertake a comprehensive review of the Petroleum Industry Act in consultation with relevant stakeholders to address the identified fiscal and structural anomalies permanently.
Implementation Committee Constituted
To oversee the execution of this landmark directive, President Tinubu has approved the constitution of an Implementation Committee. The committee is chaired by the Minister of Finance and Coordinating Minister of the Economy and includes the Attorney-General of the Federation and Minister of Justice, the Minister of Budget and National Planning, and the Minister of State, 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 provide the secretariat.
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