Tinubu signs executive order for direct remittance of oil, gas revenues to Federation Account

Under the current PIA framework, the Presidency said NNPC Limited retained 30 per cent of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts.

In addition, the national oil company was said to retain 20 per cent of its profits to cover working capital and future investments.

The Federal Government described the additional 30 per cent management fee as unjustified, arguing that the existing 20 per cent retained earnings were sufficient to support the functions NNPC Limited performs under such contracts.

The Presidency also raised concerns over another 30 per cent retention of profit oil and profit gas by NNPC Limited under the same contract arrangements, earmarked for the Frontier Exploration Fund under sections 9(4) and (5) of the PIA.

It warned that a fund of that magnitude, devoted to speculative exploration, risked accumulating large idle cash balances and encouraging inefficient spending at a time government resources were urgently needed for national priorities such as security, education, healthcare and energy transition investments.

The Executive Order further suspended payments of the Gas Flare Penalty into the Midstream and Downstream Gas Infrastructure Fund (MDGIF), directing instead that proceeds from all gas flaring penalties be paid into the Federation Account.

The Presidency noted that while the MDGIF was intended to support environmental remediation and relief for host communities impacted by gas flaring, the PIA had already established a dedicated Environmental Remediation Fund administered by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), with lessees required to contribute fees for the same purpose.

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“All these deductions far exceed global norms and effectively divert more than two-thirds of potential remittances to the Federation Account,” the statement said, adding that the continuing decline in net oil revenue inflows was largely attributable to the deductions and fragmented oversight under the current PIA architecture.

It said the Executive Order would address overlapping and redundant provisions across relevant laws and regulatory instruments within the PIA framework and NNPC Limited’s governing structure, with the aim of eliminating “multiple layers of deductions” that erode revenues due to the Federation Account.

The President also identified structural concerns regarding NNPC Limited’s continued role as a concessionaire under Production Sharing Contract arrangements, noting that the framework allowed the company to influence operating costs while functioning as a commercial entity, creating potential distortions and undermining its transition into a fully commercial operator as envisioned under the PIA.

As part of the reforms, the Presidency said NNPC Limited would no longer collect and manage the 30 per cent Frontier Exploration Fund.

It said the company must ensure that the 30 per cent profit from oil and gas currently earmarked for the fund under production sharing, profit sharing, and risk service contracts is henceforth transferred to the Federation Account.

NNPC Limited, the statement added, would also no longer be entitled to the 30 per cent management fee on Profit Oil and Profit Gas revenues meant for the Federation Account.

“In the same vein, all operators/contractors of oil and gas assets held under a production sharing contract shall, from the date of the Executive Order, which is February 13, 2026, pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other interest howsoever described which is due to the government of the federation directly to the Federation Account,” the Presidency said.

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 in respect of integrated operations where upstream and midstream petroleum operations are fully combined.

To ensure effective implementation, the President approved the establishment of an Implementation Committee comprising the Minister of Finance and Coordinating Minister of the Economy; the Attorney-General of the Federation and Minister of Justice; the Minister of Budget and National Planning; and the Minister of State, Petroleum Resources (Oil).

Other members include the Chairman of the Nigeria Revenue Service; a representative of the Ministry of Justice; the Special Adviser to the President on Energy; and the Director-General of the Budget Office of the Federation, who will serve as secretary to the committee.

The President affirmed that the reforms were of urgent national importance, given their implications for national budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians.

He also said his administration would undertake a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address identified fiscal and structural anomalies.