President Bola Ahmed Tinubu has signed an executive order directing the immediate remittance of oil and gas revenues to the Federation Account, in a move aimed at boosting government income, eliminating duplicative deductions, and strengthening fiscal transparency in Nigeria’s petroleum sector.
The directive, issued pursuant to Section 5 of the 1999 Constitution (as amended), seeks to realign revenue flows with Section 44(3) of the Constitution, which vests ownership and control of all mineral resources in the Federal Government for the benefit of the Federation.
Reversing Revenue Retentions Under PIA
According to the Presidency, the executive order addresses structural and fiscal concerns arising from the Petroleum Industry Act (PIA), enacted in 2021, which created multiple revenue retention mechanisms that significantly reduced remittances to the Federation Account.
Under the current framework, the Nigerian National Petroleum Company Limited (NNPC Ltd.) retains:
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30 percent of profit oil and profit gas as a management fee under Production Sharing, Profit Sharing, and Risk Service Contracts;
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20 percent of its profits for working capital and future investments; and
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An additional 30 percent of profit oil and profit gas for the Frontier Exploration Fund.
The Federal Government described the combined deductions as excessive and inconsistent with global norms, noting that they divert more than two-thirds of potential oil and gas revenues away from the Federation Account.
Under the new executive order:
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NNPC Ltd. will no longer collect or manage the 30 percent Frontier Exploration Fund.
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The 30 percent management fee on profit oil and profit gas revenues has been discontinued.
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All profit oil, profit gas, royalty oil, tax oil, and other government entitlements under relevant contracts must be paid directly into the Federation Account.
Suspension of Gas Flare Penalty Payments to MDGIF
The President also suspended the payment of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Instead, proceeds from gas flaring penalties will now be remitted directly to the Federation Account.
Expenditures from the MDGIF, where applicable, must comply strictly with existing public procurement laws and regulations.
Structural Reforms and Oversight Measures
The executive order introduces measures to reposition NNPC Ltd. strictly as a commercial entity, addressing concerns over its dual role as both a concessionaire and a commercial operator under Production Sharing Contracts. The Presidency noted that the current structure risks competitive distortions and undermines the company’s intended commercial transformation under the PIA.
To ensure effective implementation, President Tinubu approved the establishment of an inter-ministerial Implementation Committee. The committee includes:
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The Minister of Finance and Coordinating Minister of the Economy;
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The Attorney-General of the Federation and Minister of Justice;
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The Minister of Budget and National Planning;
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The Minister of State for Petroleum Resources (Oil);
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The Chairman of the Nigeria Revenue Service;
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The Special Adviser to the President on Energy; and
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The Director-General of the Budget Office of the Federation, who will serve as secretariat.
In addition, a joint project team will be constituted to coordinate integrated petroleum operations, with the relevant regulatory commission serving as interface with licensees and lessees.
Broader Fiscal Implications
The President described the reforms as urgent and necessary to enhance revenue transparency, strengthen national budgeting, improve debt sustainability, and redirect resources toward critical national priorities such as security, healthcare, education, and energy transition investments.
He also indicated that his administration would undertake a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address identified fiscal and structural anomalies.
The executive order, dated February 13, 2026, has been officially gazetted and takes immediate effect.
