Nigeria’s Oil and Gas Sector Enters a New Fiscal Era

By Olumide Bajulaiye

The Nigerian oil and gas industry is undergoing one of its most significant fiscal restructurings in recent years, following sweeping directives that fundamentally alter revenue flows and operational oversight.

Announced by the Presidency, these reforms have far-reaching implications for operators, regulators, and the country’s broader fiscal landscape.
Revenue Streams Shift to the Federation Account
A major change is the end of NNPC Limited’s role in retaining certain revenues. Specifically:
The 30% management fee on Profit Oil and Profit Gas will no longer be retained by NNPC Limited.
The 30% Frontier Exploration Fund, previously managed from profit oil/gas, will also now bypass NNPC.
Instead, these funds—and all other government entitlements from oil and gas—are to be remitted directly into the Federation Account starting February 13, 2026. This includes royalty oil, tax oil, profit oil, and profit gas.
Analysts suggest this move could significantly improve transparency and reduce potential bottlenecks or leakages in revenue collection. For the government, it’s an opportunity to enhance fiscal predictability, but for NNPC and its joint venture partners, it marks a major shift in cash management and operational autonomy.
Integrated Operations Under Oversight
To manage this new structure, a joint project team will be established to oversee integrated upstream-midstream operations. Regulatory bodies will serve as the interface with license holders, effectively centralizing oversight and ensuring compliance with the direct remittance mandate.
This could improve operational coordination but may also require oil and gas companies to adapt quickly to new reporting and operational protocols.
High-Level Committee to Ensure Accountability
Execution of these reforms will be overseen by a high-level committee comprising the Finance Minister, Attorney-General, Budget Minister, Petroleum Minister of State, NIRSAL chairman, Budget Office DG, and other officials. This indicates the government’s intent to not only enforce compliance but also maintain strategic oversight over fiscal management in the sector.
PIA 2021 Review on the Horizon
Perhaps most telling is the President’s signal for a broader review of the Petroleum Industry Act 2021 (PIA 2021). Stakeholder consultations will focus on addressing fiscal and structural issues, suggesting that these directives are part of a larger strategy to modernize and rationalize the industry’s framework.
What This Means for the Industry
For operators: Immediate changes in revenue remittance and reporting structures. Operational flexibility may be constrained, but compliance clarity improves.
For NNPC: Reduced direct control over revenue streams, signaling a shift towards a regulatory rather than managerial role.
For government finances: Potentially more transparent and efficient collection of oil and gas revenues.
For investors: Signals a willingness to address structural inefficiencies, which could improve confidence if properly implemented.
In short, these reforms mark a bold step toward centralization, accountability, and fiscal discipline in Nigeria’s oil and gas sector. For industry watchers, the coming months will be critical as operators, regulators, and