By Olusegun Obisanya
President Bola Tinubu has signed a far-reaching Executive Order aimed at safeguarding Nigeria’s oil and gas revenues, eliminating wasteful deductions, and restoring the constitutional revenue rights of the Federal, State and Local Governments.
The Executive Order, signed pursuant to Section 5 of the 1999 Constitution (as amended), is anchored on Section 44(3), which vests the ownership and control of all minerals, mineral oils and natural gas in the Government of the Federation. According to the Presidency, the directive is designed to curb systemic revenue losses occasioned by overlapping deductions and fragmented oversight structures under the Petroleum Industry Act (PIA).
A statement recently by the President’s Special Adviser on Information and Strategy, Bayo Onanuga, said the order seeks to reverse provisions of the Petroleum Industry Act that have, since 2021, significantly reduced net oil revenues flowing into the Federation Account.
“The directive seeks to restore the constitutional revenue entitlements of the Federal, State, and Local Governments, which were taken away in 2021 by the Petroleum Industry Act,” the statement said, noting that the PIA “created structural and legal channels through which substantial Federation revenues are lost through deductions, sundry charges, and fees.”
Under the existing framework, *NNPC Limited* retains 30 per cent of profit oil and profit gas as a management fee under Production Sharing Contracts, in addition to retaining 20 per cent of its profits for working capital and future investments. The Federal Government described the arrangement as excessive.
“Given the existing 20 per cent retention, the additional 30 per cent management fee is considered unjustified… as the retained earnings are already sufficient to support the functions NNPC Limited performs under these contracts,” the press release stated.
The statement further disclosed that another 30 per cent of profit oil and profit gas is retained under the Frontier Exploration Fund, a provision which, according to the Presidency, risks encouraging inefficiency. A fund of that magnitude, it said, “risks accumulating large idle cash balances… at a time when government resources are urgently needed for core national priorities, including security, education, healthcare, and energy transition investments.”
The Executive Order also addresses duplications surrounding gas flaring penalties. While the PIA established the Midstream and Downstream Gas Infrastructure Fund (MDGIF) to fund remediation efforts, the Presidency noted that Section 103 of the Act already provides for an Environmental Remediation Fund administered by the upstream regulator.
“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 is largely attributable to these deductions and fragmented oversight.”
As part of the reforms, the President directed that NNPC Limited “will no longer collect and manage the 30 per cent Frontier Exploration Fund,” and must henceforth transfer such revenues directly to the Federation Account. The company will also cease collecting the 30 per cent management fee on profit oil and gas.
In addition, operators under production sharing contracts are now required to pay “Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other interest… directly to the Federation Account” with effect from February 13, 2026.
President Tinubu also ordered the suspension of gas flare penalty payments into the MDGIF, directing that proceeds from such penalties be paid into the Federation Account, while all MDGIF expenditures must comply with public procurement laws.
The President identified “structural concerns regarding the continued role of NNPC Limited as a concessionaire,” noting that the current arrangement “creates potential competitive distortions and undermines its transition into a fully commercial operator.”
He stressed that the reforms are of “urgent national importance,” given their impact on “national budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians.”
The statement added that the administration will undertake a comprehensive review of the PIA in consultation with stakeholders to address fiscal and structural anomalies.
An implementation committee comprising key ministers and revenue officials has been approved to ensure effective execution of the order, underscoring what the Presidency described as a decisive move to plug leakages and maximise oil and gas revenues for national development.
