Deductions from Nigeria’s Federation Account fell by N1.7tn in the first half of 2026 following President Bola Tinubu’s directive to redirect certain oil and gas revenues to the account, according to the World Bank.
The bank disclosed this in its Nigeria Development Update report, stating that total deductions dropped from N10.1tn in the first half of 2025 to N8.4tn during the corresponding period of 2026.
The 16.8 per cent decline followed the implementation of Executive Order 9, signed by Tinubu on February 13, 2026, which ended certain revenue deductions by the Nigerian National Petroleum Company Limited (NNPCL) and redirected gas-flaring penalties to the Federation Account.
Under the order, NNPCL stopped deducting a 30 per cent management fee and contributions to the Frontier Exploration Fund from profit oil and profit gas under specified petroleum contracts.
The directive also moved proceeds from gas-flaring penalties away from the Midstream and Downstream Gas Infrastructure Fund and into the Federation Account, increasing the share of petroleum revenue available for distribution among the federal, state and local governments.
The World Bank said the reduction in deductions helped raise revenue distributed from the Federation Account to N10.5tn in the first half of 2026, compared with N7.6tn in the same period of 2025.
The increase of N2.9tn represented a 38.2 per cent rise year-on-year.
Before the order, the Petroleum Industry Act 2021 provided for NNPCL to receive a 30 per cent management fee on profit oil and profit gas from specified production-sharing, profit-sharing and risk-service contracts. A further 30 per cent allocation was designated for the Frontier Exploration Fund.
Gas-flaring penalties were also channelled into a separate fund intended to support gas infrastructure development.
The Tinubu administration argued that these arrangements reduced the petroleum revenues reaching the Federation Account. The order consequently directed relevant petroleum contractors to remit specified payments, including royalties, tax oil and profit oil, directly to the account.
The reforms are intended to improve transparency in oil revenue collection and increase the funds available to the three tiers of government for public spending.
However, the World Bank noted that gross Federation Account revenue rose by a more modest 6.8 per cent, from N17.7tn in the first half of 2025 to N18.9tn in the first half of 2026.
Gross revenue as a share of Nigeria’s Gross Domestic Product also declined from 8.0 per cent to 7.6 per cent over the period.
The figures indicate that lower deductions contributed significantly to the increase in distributable revenue, despite the relatively modest growth in total collections.
