By Ayomide Otitoju
President Bola Tinubu has signed a new Executive Order aimed at safeguarding and increasing oil and gas revenues accruing to the Federation Account, while eliminating what the Federal Government described as wasteful deductions and duplicative structures under the Petroleum Industry Act (PIA).
In a statement issued by presidential spokesperson Bayo Onanuga, the President said the directive was made pursuant to Section 5 of the 1999 Constitution (as amended) and anchored on Section 44(3), which vests ownership and control of all minerals, mineral oils and natural gas in the Federal Government.
According to the Presidency, the order seeks to restore constitutional revenue entitlements of the federal, state and local governments, which it said were weakened by provisions of the PIA enacted in 2021.
Under the current framework, NNPC 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, in addition to 20 per cent of its profits for working capital and future investments. The government argued that the additional 30 per cent management fee is unjustified.
The order also halts the 30 per cent allocation of profit oil and gas to the Frontier Exploration Fund, previously managed by NNPC Limited. All such funds will now be remitted directly to the Federation Account.
Similarly, payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund have been suspended. Proceeds from gas flaring penalties will henceforth be paid into the Federation Account, while any related expenditure must comply with public procurement laws.
Effective February 13, 2026, operators under Production Sharing Contracts are to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas and other government dues directly to the Federation Account.
The Presidency said the reforms are designed to curb revenue leakages, enhance transparency and reposition NNPC Limited strictly as a commercial entity, in line with the original intent of the PIA.
President Tinubu also approved the constitution of an inter-ministerial Implementation Committee, comprising key officials including the Ministers of Finance, Justice, Budget and National Planning, the Minister of State for Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, and other senior government representatives, to oversee coordinated execution of the order.
The President further directed a comprehensive review of the PIA in consultation with stakeholders to address identified fiscal and structural concerns, citing the urgent need to strengthen budgeting, debt sustainability and economic stability.
