Tinubu Orders Direct Transfer of Oil, Gas Revenues to Federation Account

President Bola Tinubu has signed a sweeping Executive Order mandating the direct remittance of oil and gas revenues to the Federation Account, in a move aimed at blocking revenue leakages, dismantling overlapping structures, and boosting funds available to the three tiers of government.

The directive, signed pursuant to Section 5 of the 1999 Constitution (as amended), seeks to restore what the Federal Government describes as constitutional revenue entitlements of the Federal, State and Local Governments affected by provisions of the Petroleum Industry Act.

Under the existing framework of the Act, NNPC Limited retains 30 per cent of the Federation’s oil revenue as a management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts and Risk Service Contracts. The company also withholds 20 per cent of its profits for working capital and future investments.

The Federal Government argues that the additional 30 per cent management fee is unnecessary, given the 20 per cent profit retention already allowed.

It further raised concerns over the 30 per cent allocation of profit oil and gas to the Frontier Exploration Fund under Sections 9(4) and (5) of the PIA, describing the fund as excessively large and potentially prone to inefficient spending at a time of pressing national needs.

With the new order, NNPC Limited will no longer manage or retain the 30 per cent Frontier Exploration Fund. Instead, the 30 per cent profit from oil and gas under relevant contracts will now be paid directly into the Federation Account.

The company is also stripped of entitlement to the 30 per cent management fee on profit oil and gas revenues.

In addition, all operators and contractors holding oil and gas assets under production sharing arrangements are now required, effective February 13, 2026, to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas and any other government-entitled revenues straight to the Federation Account.

The President also suspended further payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund. Proceeds from such penalties will henceforth be paid into the Federation Account, while any spending from the Fund must comply with existing public procurement regulations.

President Tinubu said the reforms are critical to improving national budgeting, debt sustainability and economic stability, stressing that oil and gas revenues must be better protected for the benefit of Nigerians.

He added that his administration would undertake a broader review of the Petroleum Industry Act in consultation with stakeholders to address identified fiscal and structural gaps.

To ensure seamless execution, the President approved the formation of an implementation committee comprising key economic and justice officials, alongside a joint project team to coordinate integrated petroleum operations.

The Presidency maintains that the Executive Order, now gazetted, will enhance transparency, eliminate duplicative deductions and reposition NNPC Limited strictly as a commercial entity while safeguarding the Federation’s financial interests.