The Federation Account Allocation Committee (FAAC) has begun receiving the full proceeds from Nigeria’s Production Sharing Contract (PSC) oil revenues following the implementation of President Bola Ahmed Tinubu’s Executive Order 9 of 2026.
The development follows compliance by the Nigerian National Petroleum Company Limited with the presidential directive designed to improve fiscal transparency and increase government earnings from the oil and gas sector.
According to recent fiscal reports, the Federation Account has received 100 per cent of PSC profits since February 2026, marking a significant shift from the previous revenue-sharing framework operated under the Petroleum Industry Act (PIA).
The report stated that “from February 2026, PSC distribution is in compliance with Executive Order 9 2026,” confirming the full enforcement of the new policy.
Before the directive, PSC revenues in 2025 were distributed using the PIA’s 30:30:40 formula. Out of the N438.54 billion PSC profit recorded in the first quarter of 2025, N131.56 billion was deducted by NNPCL as management fees, while another N131.56 billion was allocated to frontier exploration activities.
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This left only N175.42 billion — representing 40 per cent of the total PSC profit — available for remittance into the Federation Account for distribution through FAAC.
Under the old arrangement, a total of N263.12 billion was deducted before revenue sharing, significantly reducing the amount available to the federal, state and local governments.
The PSC revenue-sharing structure had faced criticism from state governments and fiscal policy experts who argued that the deductions weakened distributable revenues at a time when many subnational governments were grappling with mounting debt obligations and rising expenditure pressures.
Executive Order 9, signed by President Tinubu in February 2026, introduced broad reforms to oil revenue remittances.
The directive suspended NNPCL’s collection of management fees from PSC revenues and halted deductions for frontier exploration funding previously permitted under the PIA.
It also mandated the full remittance of oil and gas revenues into the Federation Account for distribution among the three tiers of government.
In addition, the order suspended the payment of gas flare penalties into the Midstream Gas Infrastructure Fund and clarified regulatory responsibilities between the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
Government officials said the reforms were aimed at strengthening fiscal discipline, improving transparency, and eliminating off-budget deductions that previously reduced distributable national revenues.
FAAC recently shared N2.036 trillion among the federal, state and local governments for March 2026.
Earlier, in May 2025, President Tinubu signed the Upstream Petroleum Operations Cost Efficiency Incentives Order, which introduced performance-based tax incentives for upstream operators that achieve verifiable cost savings in line with established industry benchmarks.
