…issues executive order approving direct remittance of oil revenues
….suspends NNPC Ltd management fee
In a decisive move to halt the hemorrhaging of Nigeria’s primary revenue source, President Bola Tinubu has signed a landmark Executive Order that effectively strips the Nigerian National Petroleum Company Limited (NNPCL) of its controversial multi-billion naira management fees and speculative exploration funds.
The directive, which takes immediate effect, aims to correct what the Presidency describes as a treacherous erosion of the Federation Account caused by structural flaws within the Petroleum Industry Act (PIA) of 2021.
For years, the three tiers of government—federal, state, and local have watched their revenue entitlements dwindle under a framework that allowed the NNPCL to retain a staggering 30% management fee on Profit Oil and Gas, alongside another 30% for a Frontier Exploration Fund.
By Gazetting this Order, President Tinubu has declared these deductions unjustified, noting that the company’s existing 20% profit retention for working capital is more than sufficient for its operations.
Beyond the balance sheets of the oil sector, this move is a high-stakes play for the survival of the average Nigerian.
The Federal Government highlighted a sobering reality, while billions were being stashed away in speculative exploration funds risking the accumulation of large, idle cash balances, the nation’s core priorities like healthcare, education, and national security were starving for resources.
By redirecting these diverted billions directly into the Federation Account, the administration is signaling a shift from funding inefficient exploration spending to investing in the immediate well-being of the people.
The Executive Order also serves as a major correction to the NNPCL’s dual role. The President identified a critical competitive distortion where the company functioned as both a commercial entity and a concessionaire capable of influencing operating costs.
To ensure a level playing field and accelerate the NNPCL’s transition into a truly commercial, world-class enterprise, the government has removed its influence over revenue collection.
From February 13, 2026, all operators of oil and gas assets under Production Sharing Contracts are mandated to pay Royalty Oil, Tax Oil, and Profit Oil directly to the Federation Account. This bypasses the old system where funds were first channeled through the NNPCL, a process that frequently led to fragmented oversight and sundry charges that consumed more than two-thirds of potential remittances.
The President also suspended the payment of Gas Flare Penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF).
Investigating the duplicative structures of the sector, the government found that host communities were already being served by a dedicated Environmental Remediation Fund. Consequently, gas flaring penalties will now flow into the Federation Account to support broader economic stability, while future expenditures from the MDGIF will be subjected to rigorous public procurement laws to ensure transparency.
Recognizing that an Executive Order is an urgent bridge rather than a permanent fix, President Tinubu announced that his administration will undertake a comprehensive review of the Petroleum Industry Act.
In the interim, an Implementation Committee led by the Minister of Finance and the Attorney-General has been established to ensure these reforms are not stalled by bureaucracy.
This move marks a significant departure from the status quo, placing the financial survival of the Federation above the administrative comfort of its most powerful commercial entity.
As the government prepares to recapture the wealth beneath Nigeria’s soil, the focus remains clear: ensuring that oil revenues serve the many, not the structures that manage them.