Tinubu Oil Revenue Executive Order mandates direct remittance to the Federation Account and halts key PIA deductions
President Bola Ahmed Tinubu has signed a sweeping Executive Order mandating the direct remittance of oil and gas revenues to the Federation Account, effectively dismantling layers of deductions permitted under the Petroleum Industry Act 2021 that have reduced net inflows to federal, state and local governments.
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The Tinubu Oil Revenue Executive Order, issued pursuant to Section 5 of the Constitution of the Federal Republic of Nigeria, is anchored on Section 44(3), which vests ownership and control of all minerals, mineral oils and natural gas in the Government of the Federation.
According to the Presidency, the directive seeks to restore the constitutional revenue entitlements of the three tiers of government, which it said were eroded by structural and legal provisions introduced under the Petroleum Industry Act.
Under the existing framework, Nigerian National Petroleum Company Limited retains 30 per cent of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas from Production Sharing Contracts, Profit Sharing Contracts and Risk Service Contracts.
The company also keeps 20 per cent of its profits as retained earnings for working capital and future investments.
The Federal Government described the additional 30 per cent management fee as unjustified, arguing that the 20 per cent retained earnings are sufficient to support operational responsibilities.
In addition, Nigerian National Petroleum Company Limited retains another 30 per cent of profit oil and profit gas under the same contracts for the Frontier Exploration Fund, as provided in Sections 9(4) and (5) of the Act.
The Presidency warned that such significant allocations to frontier exploration risk creating idle cash balances and inefficient spending at a time when government resources are urgently required for security, education, healthcare and energy transition priorities.
The Executive Order also addresses the Midstream and Downstream Gas Infrastructure Fund, funded through gas flaring penalties under Section 104 of the Act.
President Tinubu suspended payments into the fund and directed that all gas flare penalty proceeds be paid directly into the Federation Account.
“All operators and contractors of oil and gas assets held under a production sharing contract shall, from February 13, 2026, pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other interest due to the Government of the Federation directly to the Federation Account,” the gazetted order states.
The directive further stipulates that Nigerian National Petroleum Company Limited will no longer collect and manage the 30 per cent Frontier Exploration Fund and will cease retaining the 30 per cent management fee on profit oil and profit gas revenues due to the Federation.
According to the Presidency, the combined deductions under the Petroleum Industry Act framework effectively divert more than two-thirds of potential remittances away from the Federation Account, contributing to declining net oil revenue inflows and fragmented fiscal oversight.
The Tinubu Oil Revenue Executive Order also introduces structural reforms aimed at repositioning Nigerian National Petroleum Company Limited strictly as a commercial enterprise, removing its dual role as concessionaire and operator in Production Sharing Contracts. The Presidency said the existing arrangement creates potential competitive distortions.
President Tinubu described the reforms as urgently necessary, citing implications for national budgeting, debt sustainability, economic stability and the overall well-being of Nigerians.
The President also announced a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address identified fiscal and structural anomalies.
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To ensure implementation, President Tinubu approved the constitution of an Implementation Committee comprising 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, 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 serve as secretariat.
Quadri Olaitan is a journalist and contributor to Freelanews.com, covering news, public affairs, and human-interest stories.
