Mkpoikana Udoma
Port Harcourt — President Bola Tinubu has signed a sweeping Executive Order, EO, to halt what the Federal Government describes as excessive deductions from oil and gas revenues, directing that billions of Naira in previously retained funds be paid directly into the Federation Account.
The EO, signed pursuant to Section 5 of the 1999 Constitution (as amended) and anchored on Section 44(3), seeks to restore what the Presidency calls the “constitutional revenue entitlements” of federal, state and local governments.
According to a statement issued by Presidential spokesman Bayo Onanuga, the directive addresses structural and fiscal concerns arising from the implementation of the Petroleum Industry Act, PIA.
End to 30% Frontier Fund Retention
Under the new order, NNPC Limited will no longer collect and manage the 30% Frontier Exploration Fund derived from profit oil and profit gas under Production Sharing Contracts, PSCs, Profit Sharing Contracts and Risk Service Contracts.
Instead, that 30% share will now be transferred directly to the Federation Account. NNPC Limited will also cease collecting the additional 30% management fee on profit oil and profit gas revenues previously retained under the PIA framework.
The Presidency argued that these deductions, combined with NNPC’s 20% profit retention for working capital and investments, exceed global norms and divert more than two-thirds of potential remittances due to the Federation.
Gas Flare Penalties Redirected
The EO further suspends payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund, MDGIF.
Henceforth, proceeds from gas flare penalties imposed on operators will be paid directly into the Federation Account. All expenditures from the MDGIF must now comply strictly with public procurement laws and regulations.
The administration cited duplication within the PIA framework, noting that environmental remediation responsibilities are already covered under separate statutory provisions.
Direct Payment to Federation Account
Effective February 13, 2026, all operators and contractors under production sharing contracts are mandated to pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas and other government entitlements directly into the Federation Account.
The President also flagged structural concerns over NNPC Limited’s role as a concessionaire under PSC arrangements, stating that the current model risks competitive distortions and undermines the company’s transition into a fully commercial enterprise.
Implementation Committee Set Up
To ensure coordinated execution, Tinubu approved the establishment of an Implementation Committee comprising:
Minister of Finance and Coordinating Minister of the Economy, Attorney-General of the Federation and Minister of Justice, Minister of Budget and National Planning.
Others are Minister of State, Petroleum Resources (Oil), Chairman, Nigeria Revenue Service, Representative of the Ministry of Justice, Special Adviser to the President on Energy, Director-General, Budget Office of the Federation (Secretariat).
The President described the reforms as urgent and necessary for national budgeting, debt sustainability, economic stability and improved public welfare.
He also signalled that a broader review of the Petroleum Industry Act will be undertaken in consultation with stakeholders to address fiscal and structural anomalies.
The Executive Order marks one of the most consequential fiscal interventions in Nigeria’s oil sector since the enactment of the PIA, with significant implications for revenue flows, intergovernmental allocations and the commercial repositioning of NNPC Limited.
