- Safiu Kehinde
President Bola Tinubu has issued an executive order demanding the direct remittance of oil and gas revenues into the Federation account.
This was contained in a statement issued on Wednesday by the Special Adviser to the President on Information and Strategy, Bayo Onanuga.
The President, according to the statement gave the order in a bid to safeguard and enhance oil and gas revenues for the Federation.
Onanuga further maintained that the order is aimed at curbing wasteful spending, eliminate duplicative structures in the sector of the national economy, and redirect resources for the benefit of the Nigerian people.
The President reportedly signed the Executive Order in pursuance of Section 5 of the Constitution of the Federal Republic of Nigeria (as amended).
Anchored on Section 44(3) of the Constitution, the Executive Order 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, according to the statement, seeks to restore the constitutional revenue entitlements of the Federal, State, and Local Governments, which were taken away in 2021 by the Petroleum Industry Act(PIA).
Under the current PIA framework, NNPC Limited retains 30 per cent 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.
In addition, the company retains 20 per cent of its profits to cover working capital and future investments.
Given the existing 20% retention, the additional 30% management fee is considered unjustified by the Federal Government, as the retained earnings are already sufficient to support the functions NNPCL performs under these contracts.
NNPC Limited is also said to retain another 30% of its profit oil and profit gas under the production sharing, profit sharing, and risk service contracts, as the Frontier Exploration Fund under sections 9(4) and (5) of the PIA.
These have however been changed with Tinubu’s issuance of the Executive Order which, as gazetted, declaed that the NNPC Limited will no longer collect and manage the 30% Frontier Exploration Fund.
Rather, the 30% profit from oil and gas from production sharing, profit sharing, and risk service contracts currently earmarked for the frontier exploration fund will now be transferred to the Federation Account.
Also, NNPC Limited will no longer be entitled to the 30% management fee on profit oil and profit gas revenues, which should go to the federation account.
In the same vein, all operators/contractors of oil and gas assets held under a production sharing contract shall, from the date of the Executive Order, which is February 13, 2026, pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other interest howsoever described which is due to the government of the federation directly to the Federation Account.
The order also extended to the Midstream and Downstream Gas Infrastructure Fund (MDGIF) under Section 52(7)(d) PIA which is funded by the collection of gas flaring penalties provided under Section 104.
The fund is to be used for supporting environmental remediation and relief for host communities impacted by gas flaring.
However, section 103 of the PIA already establishing a dedicated Environmental Remediation Fund, administered by NUPRC, specifically designed to fund the rehabilitation of communities negatively impacted by upstream petroleum operations, including gas flaring.
To this effect, Tinubu also suspended payments of the Gas Flare Penalty into the Midstream and Downstream Gas Infrastructure Fund.
He declared that the commission shall, from the date of the Executive Order, pay proceeds from all penalties imposed on operators for flaring gas into the Federation Account and cease payment of such proceeds into the Midstream and Downstream Gas Infrastructure Fund (MDGIF).
All expenditure from the MDGIF shall be conducted in line with extant public procurement laws, policies and regulations.
Tinubu further approved the constitution of a joint project team to execute integrated petroleum operations.
The commission, according to Onanuga, shall serve as the interface with licensees and lessees in respect of integrated operations where upstream and midstream petroleum operations are fully combined.
Tinubu affirmed that the reforms are of urgent national importance, given their implications for national budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians.
He noted that his administration will also undertake a comprehensive review of the Petroleum Industry Act in consultation with relevant stakeholders to address identified fiscal and structural anomalies.
The President held that all the deductions far exceed global norms and effectively divert more than two-thirds of potential remittances to the Federation Account with the continuing decline in net oil revenue inflows largely attributable to these deductions and fragmented oversight under the current PIA architecture.
The Executive Order reportedly introduces immediate measures to curb leakages, enhance transparency, eliminate duplicative structures, and reposition NNPC Limited strictly as a commercial enterprise, while safeguarding the Federation’s interests.
Also contained in the order is the approval of the establishment of an implementation committee to oversee and ensure the effective, coordinated implementation of the EO.
The members of the committee include 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 and the Minister of State, Petroleum Resources (Oil).
Other members of the Committee are the Chairman, Nigeria Revenue Service; a Representative of the Ministry of Justice; the Special Adviser to the President on Energy; and the Director-General, Budget Office of the Federation. The latter will provide a secretariat to the committee.