Tinubu Orders Direct Remittance of Oil, Gas Revenues to Federati....

President Bola Tinubu has signed a new Executive Order mandating the direct remittance of oil and gas revenues to the Federation Account, in a move aimed at blocking revenue leakages, eliminating duplicative structures, and strengthening public finance management in the sector.

The directive, signed pursuant to Section 5 of the 1999 Constitution as amended, is anchored on Section 44(3), which vests ownership and control of all minerals, mineral oils, and natural gas in the Government of the Federation.

According to the State House, the order seeks to restore constitutional revenue entitlements of the Federal, State, and Local Governments, which the administration argues were significantly eroded by provisions of the Petroleum Industry Act.

Under the existing framework of the Act, Nigerian National Petroleum Company Limited retains 30 percent of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts.

The company also retains 20 percent of its profits for working capital and future investments.

The Federal Government maintains that the additional 30 percent management fee is unjustified, given the existing 20 percent profit retention.

It also raised concerns over another 30 percent of profit oil and profit gas allocated to the Frontier Exploration Fund under Sections 9(4) and (5) of the Act, describing the fund as excessive and potentially prone to inefficient spending.

With the new Executive Order, NNPC Limited will no longer collect or manage the 30 percent Frontier Exploration Fund.

Instead, the 30 percent profit from oil and gas under production sharing, profit sharing, and risk service contracts previously earmarked for frontier exploration will now be transferred directly to the Federation Account.

The company will also cease to collect the 30 percent management fee on profit oil and profit gas revenues, which will henceforth accrue to the Federation Account.

In addition, all operators and contractors holding oil and gas assets under production sharing contracts are required, effective February 13, 2026, to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other government-entitled interests directly to the Federation Account.

The President also suspended the payment of Gas Flare Penalties into the Midstream and Downstream Gas Infrastructure Fund.

Proceeds from such penalties will now be paid into the Federation Account, while expenditures from the fund must comply with extant public procurement laws and regulations.

The order further addresses structural concerns regarding the continued role of NNPC Limited as a concessionaire under Production Sharing Contract arrangements.

The administration noted that the existing structure creates potential competitive distortions and undermines the company’s transition into a fully commercial entity as envisioned under the Act.

President Tinubu stated that the reforms are of urgent national importance due to their implications for budgeting, debt sustainability, economic stability, and national development.

He also announced that the administration would undertake a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address identified fiscal and structural anomalies.

To ensure effective implementation, the President 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, a representative of the Ministry of Justice, the Special Adviser to the President on Energy, and the Director General of the Budget Office of the Federation, who will serve as secretariat.

The President also approved the formation of a joint project team to execute integrated petroleum operations, with the Nigerian Upstream Petroleum Regulatory Commission designated as the interface with licensees and lessees where upstream and midstream operations are fully combined.

The State House said the Executive Order has been officially gazetted and takes immediate effect.