President Bola Tinubu on Wednesday signed an Executive Order aimed at protecting and increasing oil and gas revenues accruing to the Federation, reducing wasteful expenditure, dismantling overlapping structures within the sector, and channeling more resources toward national development and the welfare of Nigerians.
According to a statement issued by his Adviser on Information and Strategy, Bayo Onanuga, the President signed the Order in exercise of the powers conferred on him under Section 5 of the 1999 Constitution (as amended).
The statement further explained that the directive is firmly rooted in constitutional provisions which vest the ownership, control, and derivative rights over all minerals, mineral oils, and natural gas—whether located on land, in territorial waters, or within Nigeria’s Exclusive Economic Zone (EEZ)—in the Federal Government.
It added that the Order is intended to restore the constitutional revenue entitlements of the federal, state, and local governments that were altered by the 2021 Petroleum Industry Act (PIA). The statement noted that the PIA established structural and legal mechanisms that have resulted in significant revenue leakages to the Federation through multiple deductions, charges, and fees.
Under the current PIA framework, NNPC 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 (PSCs), profit sharing contracts, and Risk Service Contracts (RSCs).
In addition, the company retains 20 per cent of its profits to cover working capital and future investments.
Given the existing 20 per cent retention, the government stated that the additional 30 per cent management fee is considered unjustified, as the retained earnings are already sufficient to support the functions NNPC performs under these contracts.
NNPC Limited also retains another 30 per cent of its profit oil and profit gas under the production sharing, profit sharing, and risk service contracts, as the Frontier Exploration Fund (FEF) under sections 9(4) and (5) of the PIA.
A fund of this size, being devoted to speculative exploration, according to the release, risks accumulating large idle cash balances, which would encourage inefficient exploration spending, at a time when government resources are urgently needed for core national priorities, including security, education, healthcare, and energy transition investments.
For the Midstream and Downstream Gas Infrastructure Fund (MDGIF) under Section 52(7)(d) PIA, funded by the collection of gas flaring penalties provided under Section 104, it stated that the PIA has already established a dedicated Environmental Remediation Fund, administered by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), specifically designed to fund the rehabilitation of communities negatively impacted by upstream petroleum operations, including gas flaring.
Furthermore, it argued that Section 103 already imposes a fee on lessees to contribute to this fund for precisely this purpose.
“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.
“The Executive Order aims to resolve, among others, the duplicative 30 per cent deduction for profit sharing arrangements by addressing overlapping and redundant provisions across all relevant laws and regulatory instruments under the PIA framework and NNPC Limited’s governing structure. The objective is to eliminate unjustified multiple layers of deductions that erode revenues that ought to accrue to the Federation Account, enabling the three tiers of government to pursue critical national priorities.
“The President has identified structural concerns regarding the continued role of NNPC Limited as a concessionaire under Production Sharing Contract arrangements. The existing framework, which allows the company to influence operating costs while simultaneously 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, therefore, 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,” the statement explained.
In rolling out the order, the President 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.
Tinubu noted that his administration will also undertake a comprehensive review of the PIA in consultation with relevant stakeholders to address identified fiscal and structural anomalies.
According to the Presidential Executive Order, which has been officially gazetted, NNPC Limited will no longer collect and manage the 30 per cent frontier exploration fund.
According to Tinubu, the NNPC will ensure that the 30 per cent profit from oil and gas from production sharing, profit sharing, and risk service contracts currently earmarked for the frontier exploration fund is henceforth transferred to the Federation Account.
NNPC, he said, will no longer be entitled to the 30 per cent 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.
Tinubu has also suspended payments of the Gas Flare Penalty into the MDGIF, saying that the commission will henceforth pay proceeds from all penalties imposed on operators for flaring gas into the Federation Account and cease payment of such proceeds into the Fund.
“All expenditure from the MDGIF shall be conducted in line with extant public procurement laws, policies and regulations,” Tinubu stated.
Furthermore, the President approved the constitution of a joint project team to execute integrated petroleum operations. The Commission shall serve as the interface with licensees and lessees in respect of integrated operations where upstream and midstream petroleum operations are fully combined.
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 (NRS); a Representative of the Ministry of Justice; the Special Adviser to the President on Energy; and the Director-General, Budget Office of the Federation, which will provide a secretariat to the committee.