President Bola Tinubu has issued an Executive Order (EO) to safeguard and enhance oil and gas revenues for the Federation, curb wasteful spending, eliminate duplicative structures in the sector, and redirect resources for the benefit of the Nigerian people.
According to a statement by the presidential spokesperson, Bayo Onanuga, the President signed the EO in pursuance of Section 5 of the Constitution of the Federal Republic of Nigeria (as amended).
The Executive Order is anchored on Section 44(3) of the Constitution, which vests ownership, control, and derivative rights in all minerals, mineral oils, and natural gas in, under, and upon any land in Nigeria—including its territorial waters and Exclusive Economic Zone—in the Government of the Federation.
The directive seeks to restore the constitutional revenue entitlements of the federal, state, and local governments, which were removed in 2021 by the Petroleum Industry Act (PIA).
According to Onanuga, the PIA created structural and legal channels through which substantial Federation revenues are lost via deductions, sundry charges, and fees.
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Under the current PIA framework: NNPC Limited retains 30% 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.
Additionally, the company retains 20% of its profits for working capital and future investments.
The Federal Government considers the additional 30% management fee unjustified, as the 20% retained earnings are already sufficient to support NNPC Limited’s functions under these contracts.
Moreover, NNPC Limited also retains another 30% of profit oil and profit gas under the Frontier Exploration Fund, as stipulated in sections 9(4) and (5) of the PIA.
Onanuga noted that this fund, devoted to speculative exploration, risks accumulating large idle cash balances and encourages inefficient spending at a time when resources are urgently needed for core national priorities, including security, education, healthcare, and energy transition investments.
The EO also addresses the Midstream and Downstream Gas Infrastructure Fund (MDGIF), funded by gas flaring penalties under Section 104 of the PIA. Onanuga explained that Section 103 of the PIA already establishes a dedicated Environmental Remediation Fund, administered by NUPRC, specifically designed to rehabilitate communities impacted by upstream petroleum operations. The continuation of MDGIF payments, he said, constitutes duplication.
“All these deductions far exceed global norms and effectively divert more than two-thirds of potential remittances to the Federation Account. The continuing decline in net oil revenue inflows is largely attributable to these deductions and fragmented oversight under the current PIA architecture,” Onanuga said.
The Executive Order seeks to eliminate overlapping and redundant provisions in the PIA and NNPC Limited’s governing structure, including the duplicative 30% deduction for profit-sharing arrangements.
The objective is to ensure that revenues meant for the Federation Account are preserved, enabling the three tiers of government to pursue critical national priorities.
Onanuga added that President Tinubu has identified structural concerns regarding NNPC Limited’s continued role as a concessionaire under Production Sharing Contracts.
Allowing the company to influence operating costs while functioning as a commercial entity creates potential competitive distortions and undermines its transition into a fully commercial operator, as envisioned under the PIA.
The Executive Order introduces immediate measures to curb revenue leakages, enhance transparency, eliminate duplicative structures, and reposition NNPC Limited strictly as a commercial enterprise while safeguarding the Federation’s interests.
The President emphasized that the reforms are of urgent national importance, given their implications for budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians.
President Tinubu also announced a comprehensive review of the Petroleum Industry Act in consultation with relevant stakeholders to address fiscal and structural anomalies.
According to the gazetted Executive Order: NNPC Limited will no longer collect and manage the 30% Frontier Exploration Fund. All profits currently earmarked for this fund will henceforth be transferred to the Federation Account.
NNPC Limited will also no longer be entitled to the 30% management fee on profit oil and profit gas revenues due to the Federation Account.
All operators/contractors of oil and gas assets under a Production Sharing Contract shall, from February 13, 2026, pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other government dues directly to the Federation Account.
Payments of the Gas Flare Penalty into the MDGIF are suspended. Proceeds from penalties for flaring gas shall be paid directly into the Federation Account, and any expenditure from the MDGIF shall comply with public procurement laws.
President Tinubu has approved the constitution of a joint project team to execute integrated petroleum operations, with the Commission serving as the interface with licensees and lessees where upstream and midstream operations are fully combined.
Additionally, an Implementation Committee has been established to oversee the effective, coordinated execution of the EO.
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