President Bola Ahmed Tinubu has signed a far-reaching Executive Order designed to protect and significantly increase oil and gas revenues accruing to the Federation Account, while eliminating what the Presidency describes as wasteful deductions and structural distortions in the petroleum sector.
Invoking his constitutional powers under Section 5 of the 1999 Constitution (as amended), and anchored on Section 44(3), which vests ownership and control of mineral resources in the Federal Government, the President moved to recalibrate revenue flows altered under the Petroleum Industry Act.
According to the Federal Government, existing post-PIA arrangements significantly reduced remittances to the Federation Account. Under the framework:
Nigerian National Petroleum Company Limited retained 30% of Federation oil revenues as a management fee on Profit Oil and Profit Gas under Production Sharing, Profit Sharing and Risk Service Contracts.
It also retained 20% of its profits for working capital and future investments.
An additional 30% of profit oil and gas was allocated to the Frontier Exploration Fund.
The Presidency argues that the 30% management fee is unjustifiable given the existing 20% profit retention, and that the Frontier Exploration Fund channels substantial public resources into speculative exploration at a time of fiscal strain.
Collectively, these deductions were said to divert more than two-thirds of potential remittances due to the Federation Account, contributing to declining net oil revenue inflows.
Effective February 13, 2026, the Executive Order introduces sweeping adjustments:
The 30% management fee on Profit Oil and Profit Gas is abolished.
NNPC Limited will no longer collect or manage the 30% Frontier Exploration Fund; such funds will now flow directly into the Federation Account.
All contractors under Production Sharing Contracts must pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and other entitlements directly into the Federation Account.
Payments of Gas Flare Penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF) are suspended; such penalties will now go directly into the Federation Account.
Expenditures from the MDGIF must strictly comply with public procurement laws.
The President also raised red flags over NNPC Limited’s dual function as both concessionaire and commercial operator under Production Sharing Contracts — an arrangement he said creates competitive distortions and undermines its transition into a fully commercial entity as envisioned by the PIA.
To drive implementation, Tinubu approved:
A joint project team to coordinate integrated petroleum operations.
An implementation committee comprising the Ministers of Finance, Justice, Budget, Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, and other senior officials.
Tinubu described the reforms as urgent and central to national budgeting, debt sustainability, economic stability, and citizens’ welfare. He also confirmed that a broader review of the Petroleum Industry Act will be undertaken in consultation with stakeholders to address fiscal and structural gaps.
In strategic terms, the Executive Order signals a shift: reposition NNPC strictly as a commercial enterprise while redirecting maximum revenue to the Federation Account.
If fully enforced, the reform could materially improve revenue transparency and federal allocations. The real test now is execution — because in petroleum governance, policy announcements are only half the battle.