President Bola Ahmed Tinubu has signed a far-reaching Executive Order mandating the direct remittance of oil and gas revenues to the Federation Account, in a move aimed at boosting national earnings and eliminating structural leakages in the petroleum sector.
The directive, issued pursuant to Section 5 of the Constitution of the Federal Republic of Nigeria (as amended), seeks to restore constitutional revenue entitlements of the federal, state and local governments.
The Executive Order addresses provisions under the Petroleum Industry Act (PIA), which the Federal Government says created structural channels that reduced remittances to the Federation Account through multiple deductions, fees and charges.
Under the existing framework, NNPC Limited retains 30 percent of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas derived from production and risk-sharing contracts. The company also retains 20 percent of its profits for working capital and future investments.
The government considers the additional 30 percent management fee unjustified, arguing that retained earnings are sufficient to support NNPC Limited’s commercial operations.
In addition, the Executive Order halts the transfer of 30 percent of profit oil and profit gas to the Frontier Exploration Fund. Instead, such funds will now be remitted directly to the Federation Account.
Effective February 13, 2026, all operators and contractors under production sharing contracts are required to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas and other statutory payments directly to the Federation Account.
The President also suspended payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Proceeds from gas flare penalties will now be paid directly into the Federation Account, with all MDGIF expenditures subject to public procurement laws.
The Executive Order further introduces measures to reposition NNPC Limited strictly as a commercial enterprise, reducing potential conflicts arising from its dual role as concessionaire and commercial operator.
A joint project team will be constituted to execute integrated petroleum operations, while an Implementation Committee comprising key cabinet members and senior officials will oversee coordinated execution of the reforms.
Members of the committee include the Minister of Finance and Coordinating Minister of the Economy, the Attorney-General of the Federation and Minister of Justice, 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.
President Tinubu described the reforms as urgent and necessary, citing their implications for national budgeting, debt sustainability, economic stability and the overall well-being of Nigerians.
He also announced plans for a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address identified fiscal and structural gaps.
The Executive Order has been officially gazetted and takes immediate effect.
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