PRESIDENT TINUBU ORDERS DIRECT REMITTANCE OF OIL, GAS REVENUES TO FEDERATION ACCOUNT

President  Bola Tinubu has signed an executive order directing that revenues from oil and gas operations be remitted directly to the Federation Account, in a sweeping move aimed at curbing leakages, eliminating duplications, and boosting allocations to the three tiers of government.

The directive, issued pursuant to Section 5 of the 1999 Constitution (as amended), seeks to strengthen federal control over mineral resources as provided under Section 44(3), which vests ownership and control of minerals, mineral oils and natural gas in the Federal Government.

According to the State House, the order is designed to address revenue losses linked to the implementation of the (PIA), enacted in 2021. The administration argues that certain provisions of the law have led to multiple deductions and retention arrangements that significantly reduce net inflows into the Federation Account.

Under the current framework, the retains 30 per cent of profit oil and profit gas from Production Sharing Contracts, Profit Sharing Contracts and Risk Service Contracts as a management fee. The company also retains 20 per cent of its profits for working capital and future investments.

Government officials contend that the additional 30 per cent management fee is unnecessary, given the existing 20 per cent retention, and argue that such deductions exceed global benchmarks.

The executive order also targets the 30 per cent allocation of profit oil and gas to the Frontier Exploration Fund under the PIA. The administration described the fund as disproportionately large and potentially prone to inefficient spending, especially amid fiscal pressures and competing national priorities such as security, healthcare, education and energy transition.

Similarly, payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund have been suspended. Going forward, proceeds from such penalties will be paid directly into the Federation Account, while expenditures from the fund must comply strictly with public procurement laws.

Effective February 13, 2026, all operators and contractors under production sharing arrangements are required to remit royalty oil, tax oil, profit oil, profit gas and any other government-entitled revenues directly to the Federation Account.

The order further removes NNPC Limited from collecting and managing the 30 per cent Frontier Exploration Fund and bars it from retaining the 30 per cent management fee on profit oil and gas. These revenues are now to accrue fully to the Federation Account.

The President also raised structural concerns about NNPC Limited’s dual role as both concessionaire and commercial operator, noting that the arrangement could distort competition and undermine its transition into a fully commercial entity as envisaged under the PIA.

To oversee implementation, President Tinubu approved the establishment of a multi-agency 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, the Minister of State for Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, a representative of the Ministry of Justice, the President’s Special Adviser on Energy, and the Director-General of the Budget Office, who will serve as secretary.

The presidency said the reforms are of “urgent national importance,” citing their implications for national budgeting, debt sustainability and economic stability. It also disclosed that a broader review of the Petroleum Industry Act will be undertaken in consultation with stakeholders to address identified fiscal and structural concerns.