An executive order issued by Bola Ahmed Tinubu has halted deductions previously made by the Nigerian National Petroleum Company Limited from oil and gas revenues, effectively cutting off funding streams estimated at about N2.1tn over a four-year period.
Records reviewed show that between 2022 and 2025, Nigerian National Petroleum Company Limited retained significant sums through management fees and contributions to the Frontier Exploration Fund before remitting revenues to the Federation Account.
The deductions stood at N20.7bn in 2022, surged to N695.9bn in 2023, declined to N452.6bn in 2024, and rose sharply again to N906.9bn in 2025, bringing the total to roughly N2.1tn.
Under the new directive, all revenues due to the federation must now be paid in full into the Federation Account without prior deductions. The order prioritises constitutional fiscal provisions and mandates that operational expenses, including funding for frontier exploration, must be processed through the budgetary system rather than deducted automatically from oil earnings.
The decision has been welcomed by state governments and fiscal transparency advocates, who say it will increase funds available for distribution among the three tiers of government and improve accountability in the management of oil revenues. They argue that the move addresses long-standing concerns over opaque deductions that reduced distributable income.
However, the directive has also raised concerns within the oil and gas industry. Some operators and legal analysts warn that suspending automatic funding mechanisms could create uncertainty, particularly around frontier exploration and production-sharing contract operations, unless alternative financing arrangements are clearly defined. They caution that abrupt changes could slow investment and affect output.
Labour unions in the sector have called for clarity on how the policy will be implemented, stressing that reforms should not disrupt production or threaten jobs. They urged the Federal Government to establish a transparent and sustainable funding model for critical industry activities while maintaining strict oversight of revenue remittances.
Data from the period under review show sharp fluctuations in the amounts retained by NNPC on both a monthly and annual basis, reflecting volatility in oil earnings. Analysts say these swings consistently reduced the funds available to the federation and intensified calls for tighter fiscal controls.
The directive, which takes immediate effect, will be overseen by a presidential implementation committee. Any breach of the order is expected to be treated as a violation of constitutional fiscal rules.
