President Bola Tinubu has signed an executive order mandating that all oil and gas revenues be paid directly into the Federation Account, stripping the NNPC Limited of its authority to collect deductions previously earmarked for special funds.
The order, announced on Wednesday by presidential spokesperson Bayo Onanuga, aims to safeguard national oil revenues, eliminate wasteful spending, and curb overlapping structures within the oil and gas sector.
Under the new directive, the 30 percent profit from oil and gas under Production Sharing, Profit Sharing, and Risk Service Contracts previously allocated to the Frontier Exploration Fund—will now flow directly to the Federation Account.
NNPC will also forfeit its 30 percent management fee on profit oil and gas revenues.
“All operators of oil and gas assets under production-sharing arrangements are required, from February 13, 2026, to pay all royalties, taxes, profit oil, and profit gas directly to the Federation Account,” Onanuga said.
The order also suspends the payment of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Instead, these proceeds will now go to the Federation Account, with all MDGIF expenditures strictly following public procurement laws.
Onanuga explained that the move seeks to restore constitutional revenue entitlements to the three tiers of government, which he said were undermined by the Petroleum Industry Act (PIA) of 2021.
“The PIA allows NNPC to retain up to 30 percent of federation oil revenues as management fees and another 20 percent for working capital, in addition to funds allocated for speculative frontier exploration,” he said.
“These deductions have led to declining net oil inflows and divert resources from critical sectors like security, education, and healthcare.”
The executive order also addresses structural concerns with NNPC’s dual role as a commercial operator and concessionaire under production-sharing contracts.
It introduces measures to enhance transparency, curb revenue leakages, and reposition NNPC strictly as a commercial entity while safeguarding federal interests.
To oversee implementation, President Tinubu approved a joint project team and an implementation committee comprising the Ministers of Finance, Justice, Budget and National Planning, the Minister of State for Petroleum Resources, the Nigeria Revenue Service, and other key officials.
“The reforms are urgent for national budgeting, debt sustainability, economic stability, and citizens’ welfare,” Onanuga said, adding that a full review of the PIA would follow to address fiscal and structural concerns.
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