President Bola Tinubu has signed an executive order directing the direct remittance of oil and gas revenues to the Federation Account, in a move aimed at curbing leakages, eliminating duplications, and boosting earnings for the three tiers of government.
The directive, issued under Section 5 of the Constitution, seeks to strengthen transparency and restore revenue entitlements of federal, state, and local governments under the framework of the Petroleum Industry Act.
In a State House statement on Wednesday, the Presidency said the order addresses structural provisions that have allowed substantial deductions from Federation revenues, including retention arrangements by NNPC Limited under production and profit-sharing contracts.
Under the previous arrangement, the national oil company retained 30 per cent of Federation oil revenues as a management fee, in addition to 20 per cent of profits for working capital and investments. It also controlled another 30 per cent allocated to the Frontier Exploration Fund — a structure the government says diverted significant public resources.
The new order abolishes the management fee and directs that funds previously earmarked for frontier exploration be transferred to the Federation Account. It also mandates that operators under production-sharing arrangements pay royalties, tax oil, profit oil, profit gas, and other government dues directly into the account with effect from February 13, 2026.
The President further suspended payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund, directing instead that such proceeds be remitted to the Federation Account, while spending from the fund must comply with public procurement rules.
According to the statement, the reforms are intended to reposition NNPC Limited strictly as a commercial entity, eliminate overlapping deductions, and address governance distortions arising from its dual regulatory and concessionaire roles.
Tinubu described the measures as urgent for national budgeting, debt sustainability, and economic stability, adding that his administration will undertake a comprehensive review of the Petroleum Industry Act in consultation with stakeholders.
An implementation committee comprising senior government officials, including finance, justice, petroleum, and budget authorities, has been constituted to oversee execution of the order.
The Presidency said the initiative is designed to enhance fiscal discipline, boost transparency in petroleum revenue flows, and channel more resources toward security, infrastructure, education, and healthcare.
