JUST IN: TINUBU SIGNS EXECUTIVE ORDER DIRECTING IMMEDIATE REMITTANCE OF OIL AND GAS REVENUES TO FEDERATION ACCOUNT

 TINUBU SIGNS EXECUTIVE ORDER DIRECTING IMMEDIATE REMITTANCE OF OIL AND GAS REVENUES TO FEDERATION ACCOUNT

President Bola Ahmed Tinubu has signed a sweeping Executive Order mandating the direct remittance of oil and gas revenues to the Federation Account, in a move the Presidency says is aimed at curbing revenue leakages, eliminating duplicative structures, and strengthening fiscal transparency in Nigeria’s petroleum sector.

According to a State House press release issued by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, the Executive Order was signed on February 13, 2026, pursuant to Section 5 of the Constitution of the Federal Republic of Nigeria (as amended). The directive is also anchored on Section 44(3) of the Constitution, which vests the ownership, control, and derivative rights of all minerals, mineral oils, and natural gas in the Government of the Federation.

The Presidency stated that the Order seeks to restore the constitutional revenue entitlements of the federal, state, and local governments, which it said were substantially altered under the Petroleum Industry Act (PIA). Under the existing framework of the Act, Nigerian National Petroleum Company Limited retains 30 percent 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 company retains 20 percent of its profits for working capital and future investments.

The Federal Government considers the additional 30 percent management fee unnecessary, noting that the 20 percent retained earnings are already intended to support NNPC Limited’s operational and investment obligations under the contracts. The Presidency further observed that NNPC Limited retains another 30 percent of profit oil and profit gas under the same contractual arrangements as the Frontier Exploration Fund, in line with Sections 9(4) and (5) of the PIA. According to the statement, dedicating a fund of that scale to frontier exploration could result in large idle balances and inefficient spending, particularly at a time when government resources are needed for critical priorities such as security, education, healthcare, and energy transition initiatives.

Under the newly signed Executive Order, NNPC Limited will no longer collect or manage the 30 percent Frontier Exploration Fund. Instead, the 30 percent profit from oil and gas under Production Sharing, Profit Sharing, and Risk Service Contracts will be transferred directly to the Federation Account. The company will also cease to receive the 30 percent management fee on Profit Oil and Profit Gas revenues due to the Federation.

The directive further mandates that all operators and contractors holding oil and gas assets under Production Sharing Contracts must, with effect from February 13, 2026, remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other government-entitled interests directly to the Federation Account.

In the same vein, President Tinubu has suspended payments of Gas Flare Penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Going forward, proceeds from penalties imposed on gas flaring are to be paid directly into the Federation Account, while any expenditure from the MDGIF must comply strictly with existing public procurement laws, policies, and regulations. The Presidency noted that the PIA already establishes an Environmental Remediation Fund administered by the Nigerian Upstream Petroleum Regulatory Commission to address environmental impacts arising from upstream petroleum operations, including gas flaring.

The President also raised structural concerns regarding NNPC Limited’s continued role as a concessionaire under Production Sharing Contract arrangements, stating that the existing framework allows the company to influence operating costs while functioning as a commercial entity, a situation that could create competitive distortions and undermine its transition into a fully commercial operator as envisioned under the PIA.

To ensure coordinated implementation of the reforms, President Tinubu 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 for 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. A joint project team has also been constituted to execute integrated petroleum operations, with the relevant regulatory commission serving as the interface with licensees and lessees.

The Presidency described the Executive Order as a reform of urgent national importance, citing its implications for national budgeting, debt sustainability, economic stability, and overall public welfare. It also confirmed that the Order has been officially gazetted and that a broader review of the Petroleum Industry Act will be undertaken in consultation with relevant stakeholders to address identified fiscal and structural concerns.