Bola Tinubu has signed a sweeping Executive Order mandating the direct remittance of oil and gas revenues into the Federation Account, in a move aimed at boosting transparency, blocking revenue leakages and strengthening government finances.
The directive, issued under Section 5 of the 1999 Constitution (as amended) and anchored on Section 44(3), seeks to restore what the administration describes as constitutional revenue entitlements of the Federal, State and Local Governments.
Under the new Order, the Nigerian National Petroleum Company Limited will forfeit its 30 per cent Frontier Exploration Fund allocation derived from profit oil and profit gas under Production Sharing Contracts and related arrangements. The company will also lose its 30 per cent management fee on profit oil and profit gas revenues, with such funds now to be paid directly into the Federation Account.
In addition, 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 other government entitlements straight to the Federation Account.
The President also suspended the payment of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Proceeds from such penalties will now be paid into the Federation Account, while MDGIF expenditures must comply strictly with public procurement laws.
The Federal Government argued that deductions permitted under the Petroleum Industry Act — including NNPCL’s 20 per cent retention for working capital and future investments, alongside the additional 30 per cent management fee and 30 per cent frontier exploration allocation — exceed global norms and significantly reduce remittances.
According to the administration, large allocations to speculative exploration projects risk creating idle cash balances at a time when funds are urgently needed for security, healthcare, education and energy transition investments.
The Executive Order also addresses concerns over NNPCL’s dual role as concessionaire and commercial entity under Production Sharing Contracts, a structure viewed as potentially distorting competition and weakening transparency.
Tinubu said the reforms are of urgent national importance, citing their impact on budgeting, debt sustainability and economic stability. He also signalled plans for a broader review of the Petroleum Industry Act in consultation with stakeholders to correct identified fiscal and structural gaps.
An inter-ministerial implementation committee has been established to oversee the reforms, comprising key ministers and senior government officials.
The Executive Order has already been gazetted.
