"Excessive Deductions": Tinubu Scraps NNPC's 30% Management Fee on Profit Oil, Gas, Gives Reasons
- President Bola Tinubu has eliminated the 30 per cent management fee previously retained by NNPC Limited on Profit Oil and Profit Gas
- The federal government argued that the dual deductions significantly reduced revenue available to federal, state and local governments under the PIA
- An inter-ministerial implementation committee has been set up to oversee compliance and ensure effective execution of the directive
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
President Bola Tinubu has ended the 30 per cent management fee previously retained by NNPC Limited on Profit Oil and Profit Gas derived from production sharing and related contracts.
This was contained in a statement signed and issued by the Special Adviser to the President on Information and Strategy, Bayo Onanuga.
Source: Facebook
The decision forms part of a newly signed executive order aimed at restructuring revenue flows in Nigeria’s oil and gas sector and ensuring greater remittances to the Federation Account.
Before the directive, NNPC Limited retained 30 per cent of the Federation’s oil revenues as a management fee under Production Sharing Contracts, Profit Sharing Contracts and Risk Service Contracts.
Additionally, the national oil company was permitted to retain 20 per cent of its profits to support working capital and future investments.
FG’s argument against NNPC’s deductions
The federal government argued that the 30 per cent management charge was excessive, particularly given the existing 20 per cent profit retention already provided for under the framework established by the Petroleum Industry Act.
According to the Presidency, maintaining both deductions resulted in substantial revenue losses to the Federation Account, with cumulative deductions significantly reducing the funds available for distribution to federal, state and local governments.
The executive order, therefore, eliminates NNPC Limited’s entitlement to the 30 per cent management fee on Profit Oil and Profit Gas. The revenues will now accrue directly to the Federation Account.
Tinubu concerned over NNPC’s dual role
The President also raised concerns about the structural role of NNPC Limited under the current arrangement, noting that the company’s dual function as concessionaire and commercial operator could create distortions and undermine its transition into a fully commercial enterprise as envisioned under the PIA.
The broader reform package is intended to reposition NNPC Limited strictly as a commercial entity while safeguarding the Federation’s revenue interests.
The Presidency maintained that the changes are critical for improving transparency, strengthening public finances and addressing declining net oil revenue inflows.
Source: Twitter
An inter-ministerial implementation committee has been established to ensure coordinated execution of the directive and monitor compliance across the sector.
Officials said the reform underscores the administration’s commitment to plugging revenue leakages and enhancing fiscal sustainability amid ongoing economic pressures.
NNPC remits N12.1trn to federation account
Legit.ng earlier reported that the NNPC remitted N12.117 trillion to the federation between January and October 2025, and recorded N4.358 trillion in revenue and N502 billion in profit after tax.
The company shared updates on oil production, noting that oil and condensate output in November averaged 1.6 million barrels per day.
It also disclosed that the AKK and OB3 gas pipelines, which are expected to boost gas supply, were nearing completion and would be prioritised in 2026
Source: Legit.ng
