Tinubu said the directive was designed to reverse revenue losses created by the Petroleum Industry Act (PIA) 2021, which introduced structural and legal channels that have led to substantial deductions, charges, and fees from Federation revenues.
By Ife Osemedua
365Daily – President Bola Tinubu has signed an Executive Order directing the direct remittance of oil and gas revenues to the Federation Account, in a move aimed at safeguarding national income, curbing waste, and eliminating revenue leakages in the petroleum sector.
The Executive Order, anchored on Section 44(3) of the 1999 Constitution (as amended), vests ownership, control, and derivative rights over all mineral resources, including oil and gas, in the Federal Government and seeks to restore the constitutional revenue entitlements of the three tiers of government.
In a statement on Wednesday by his Special Adviser on Information and Strategy, Bayo Onanuga, the President said the directive was designed to reverse revenue losses created by the Petroleum Industry Act (PIA) 2021, which introduced structural and legal channels that have led to substantial deductions, charges, and fees from Federation revenues.
According to the statement, the PIA framework allows NNPC Limited to retain 30 per cent of profit oil and profit gas as management fees under production sharing, profit sharing, and risk service contracts, in addition to another 20 per cent of its profits for working capital and future investments.
The Federal Government said the combined 50 per cent retention is unjustified, noting that the 20 per cent retained earnings are sufficient to support NNPCL’s operational functions.
The statement further disclosed that NNPCL also retains another 30 per cent of profit oil and profit gas as the Frontier Exploration Fund, a provision which, according to the government, risks accumulating idle funds and encouraging inefficient spending at a time when resources are urgently required for security, education, healthcare, and energy transition investments.
In addition, the President expressed concern over the Midstream and Downstream Gas Infrastructure Fund (MDGIF), financed through gas flaring penalties, describing it as duplicative, given the existence of a separate Environmental Remediation Fund already established under the PIA to address environmental degradation in host communities.
“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 persistent decline in net oil revenue inflows is largely attributable to these deductions and fragmented oversight under the current PIA framework.
Under the new Executive Order, NNPCL will no longer collect or manage the 30 per cent Frontier Exploration Fund, while the 30 per cent management fee on profit oil and gas revenues has also been abolished, with both streams now to be paid directly into the Federation Account.
The directive further mandates all operators and contractors under production sharing contracts to pay royalty oil, tax oil, profit oil, profit gas, and any other government entitlements directly into the Federation Account with effect from February 13, 2026.
President Tinubu also suspended payments of gas flare penalties into the MDGIF, ordering that all such proceeds be remitted to the Federation Account, while expenditures from the fund will now be subject to extant public procurement laws.
The President said the reforms were of urgent national importance, given their implications for national budgeting, debt sustainability, economic stability, and the overall welfare of Nigerians, adding that his administration would undertake a comprehensive review of the PIA in consultation with stakeholders to address identified fiscal and structural anomalies.
To ensure effective implementation, Tinubu approved the constitution 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, the Minister of State for Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, the Special Adviser on Energy, and the Director-General of the Budget Office of the Federation, who will serve as secretary.
The President also approved the establishment of a joint project team to execute integrated petroleum operations, with the relevant regulatory commission designated as the interface with operators and licensees.
The Executive Order has since been gazetted.