President Bola Tinubu has signed an executive order mandating the direct remittance of oil and gas revenues to the Federation Account Allocation Committee (FAAC), effectively stripping the Nigerian National Petroleum Company (NNPC) Limited of certain revenue deduction powers.
Gatekeepers News reports that the development was announced on Wednesday by presidential spokesperson Bayo Onanuga, who said the directive aims to safeguard and enhance federation revenues, curb wasteful spending and eliminate duplicative structures within the oil and gas sector.
According to the statement, the executive order — which has been officially gazetted — requires NNPC Limited to transfer to the federation account the 30 percent profit from oil and gas production under production sharing, profit sharing and risk service contracts, previously earmarked for the frontier exploration fund.
“NNPC Limited will ensure that the 30% profit from oil and gas from production sharing, profit sharing, and risk service contracts currently earmarked for the frontier exploration fund is henceforth transferred to the Federation Account,” Onanuga said.
He added: “NNPC Limited will no longer be entitled to the 30% management fee on profit oil and profit gas revenues, which should go to the federation account.”
Under the new order, all operators and contractors holding oil and gas assets under production sharing contracts are required, effective February 13, 2026, to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas and any other government interest directly to the federation account.
Gas Flare Penalties Redirected
The presidency also announced the suspension of payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF).
“The Commission shall, from the date of the Executive Order, pay proceeds from all penalties imposed on operators for flaring gas into the Federation Account and cease payment of such proceeds into the Midstream and Downstream Gas Infrastructure Fund (MDGIF),” Onanuga stated.
All MDGIF expenditures, he said, must comply with existing public procurement laws and regulations.
The executive order was signed pursuant to Section 5 of the 1999 Constitution (as amended) and anchored on Section 44(3), which vests ownership and control of mineral resources in the federal government.
‘Restore Constitutional Entitlements’
Onanuga said the directive is designed to restore the constitutional revenue entitlements of the federal, state and local governments, which he claimed were eroded by provisions of the Petroleum Industry Act (PIA) enacted in 2021.
He argued that under the current PIA framework, NNPC retains 30 percent of the federation’s oil revenues as a management fee on profit oil and profit gas, in addition to 20 percent of its profits for working capital and future investments.
“Given the existing 20% retention, the additional 30% management fee is considered unjustified by the Federal Government,” he said.
The statement further noted that NNPC also retains another 30 percent of its profit oil and profit gas as a Frontier Exploration Fund under Sections 9(4) and (5) of the PIA — a provision the presidency described as potentially encouraging inefficient spending and diverting resources from priority areas such as security, education, healthcare and energy transition.
Onanuga added that the multiple deductions “far exceed global standards”, diverting over two-thirds of potential remittances to the federation account and contributing to declining net oil revenue inflows.
Measures to Curb ‘Duplicative’ Deductions
According to the presidency, the executive order seeks to address overlapping and redundant provisions under the PIA framework and NNPC’s governing structure, particularly the duplicative 30 percent deduction under profit-sharing arrangements.
“The objective is to eliminate unjustified multiple layers of deductions that erode revenues that ought to accrue to the Federation Account, enabling the three tiers of government to pursue critical national priorities,” Onanuga said.
He added that the President identified structural concerns over NNPC’s dual role as concessionaire under production sharing contracts and as a commercial entity, warning that the existing framework could create competitive distortions.
The executive order, he said, introduces immediate measures to curb leakages, enhance transparency and reposition NNPC strictly as a commercial enterprise while protecting federation interests.
Joint Project Team, Implementation Committee
Tinubu also approved the constitution of a joint project team to execute integrated petroleum operations, with the Commission serving as the interface with licensees and lessees where upstream and midstream operations are combined.
An implementation committee has been established to oversee execution of the order. Members include the Minister of Finance and Coordinating Minister of the Economy, the Attorney-General of the Federation, 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 President’s Special Adviser on Energy, and the Director-General of the Budget Office of the Federation, who will serve as secretariat.
Tinubu described the reforms as urgent, citing their implications for national budgeting, debt sustainability, economic stability and citizens’ welfare. He also disclosed plans for a comprehensive review of the PIA with stakeholders to address fiscal and structural concerns.
