President Bola Tinubu has issued an executive order mandating that all oil and gas revenues be remitted directly to the Federation Account, a move aimed at boosting transparency, reducing waste, and closing loopholes in the sector.
The directive, announced by Presidential Spokesperson Bayo Onanuga, is backed by the Constitution and Section 44(3), which vests control of Nigeria’s mineral resources in the federal government. Tinubu explained that the move is meant to restore revenue entitlements for the federal, state, and local governments, which were affected by deductions under the Petroleum Industry Act (PIA) of 2021.
Under the previous framework, the Nigerian National Petroleum Company (NNPC) Limited retained up to 30% of the Federation’s profit oil and profit gas as a management fee, on top of 20% retained for operational and investment purposes.
The company also held another 30% under the Frontier Exploration Fund. Tinubu called these overlapping deductions excessive and said they diverted significant funds away from the Federation Account.
The executive order requires all operators and contractors under production sharing contracts to pay royalty oil, tax oil, profit oil, profit gas, and other fees directly to the Federation Account. Gas flare penalties will also be paid directly to the Federation Account, while payments into the Midstream and Downstream Gas Infrastructure Fund (MDGIF) are suspended.
Tinubu also highlighted the need to reposition NNPC Limited as a fully commercial entity and end its role as a concessionaire under Production Sharing Contracts, which he said created inefficiencies and distorted competition.
To ensure proper implementation, the order establishes a joint project team to oversee integrated petroleum operations and an Implementation Committee including the Ministers of Finance, Budget, and Petroleum Resources, the Attorney-General, the Chairman of the Nigerian Revenue Service, and other senior officials.
The government also plans a comprehensive review of the PIA to address overlaps and strengthen revenue management in the sector.
