President Bola Tinubu has signed an Executive Order aimed at boosting oil and gas revenues flowing into Nigeria’s Federation Account by removing multiple deductions previously allowed under the Nigerian National Petroleum Company Limited (NNPC) framework.
The order targets provisions under the Petroleum Industry Act (PIA) that have allowed NNPC to retain up to 30% of profit oil and profit gas as management fees on Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts.
NNPC also retains 20% of its profits for working capital and future investments, and another 30% in the Frontier Exploration Fund for exploratory activities. Officials say these deductions were considered excessive and reduced the funds available to the federal, state, and local governments.
The Executive Order directs that these overlapping and redundant deductions be eliminated to ensure that more revenues reach the Federation Account. It also addresses structural concerns with NNPC’s dual role as both regulator and commercial operator, which has created inefficiencies and potential conflicts in the management of oil operations.
According to the Presidential spokesman, the reforms are intended to improve transparency, reduce revenue leakages, and reposition NNPC strictly as a commercial enterprise while safeguarding the financial interests of the Nigerian government.
The President emphasized that the changes are crucial for national budgeting, economic stability, and funding essential priorities such as security, education, healthcare, and energy transition initiatives.
This order follows growing concerns that the previous framework under the PIA diverted too much revenue from the Federation Account, limiting resources for development projects and national priorities.
With these reforms, the government aims to ensure that oil revenues are efficiently managed and that the three tiers of government receive their rightful share, strengthening fiscal sustainability and supporting Nigeria’s broader economic goals.
