Explainer: 8 Major Highlights of President Tinubu’s Executive Order on Oil & Gas Revenues
- President Tinubu signed an executive order directing that oil and gas revenues be paid directly into the Federation Account, limiting NNPCL’s ability to retain statutory deductions
- The order eliminates the 30% management fee and abolishes the Frontier Exploration Fund, redirecting those funds to the Federation Account
- Gas flaring penalties, Royalty Oil, Tax Oil and Profit Oil payments are now required to be remitted directly to the Federation Account under the new directive
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Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
President Bola Tinubu recently signed an executive order restructuring the sharing and distribution of Nigeria’s revenues from oil and gas.
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The order, containing multiple directives, banned the Nigeria National Petroleum Company (NNPC) Limited from making deductions from oil revenues. It should be noted that these deductions are statutory and backed by the Petroleum Industry Act (PIA), 2021, an Act of the parliament that governs oil and gas operations across all streams in the country.
The President’s justification
The federal government has said the measure is aimed at improving transparency and strengthening statutory allocations to the three tiers of government.
In a statement by presidential spokesman Bayo Onanuga, the government argued that the order would reduce discretionary retention of funds and enhance accountability in the management of oil revenues.
Pro-government commentators say the NNPCL will be forced to operate as a profit-driven commercial entity, after years of incurring massive losses. However, critics argue that denying the NNPC these statutory deductions could cause financial suffocation and possible job losses.
Before exploring the pros and cons of the executive order, below are its major highlights
1. Direct Remittance:
The Executive Order directs that oil and gas revenues be paid directly into the Federation Account rather than being held or managed by intermediaries.
2. Restoration of Constitutional Entitlements:
It aims to return revenue shares to Federal, State, and Local Governments that were diminished by the 2021 PIA framework. Higher monthly FAAC allocations are expected in the coming months due to fewer deductions from oil revenues.
3. Elimination of the 30% Management Fee:
This is one of the most controversial directives in the president’s order. The NNPCL is no longer entitled to the 30% fee for managing profit oil and gas, as its 20% profit retention is deemed sufficient for operations.
4. Abolition of the Frontier Exploration Fund:
This has also generated some controversies. The NNPCL is directed to stop collecting the 30% profit oil/gas earmarked by the PIA for the exploration of frontier basins; these funds must now go to the Federation Account. Commentators have raised questions regarding the fate of the Lake Chad basin and other frontier basins that are expected to expand Nigeria’s crude oil output in the future.
5. NNPCL goes fully commercial:
The order also aims to reposition NNPCL strictly as a commercial enterprise, removing its "concessionaire" influence over operating costs to prevent market distortions.
6. No more deduction of gas flaring penalties
Payments for gas flaring will now go to the Federation Account instead of the Midstream and Downstream Gas Infrastructure Fund (MDGIF).
7. Royalties, tax on oil profit straight to federation account
According to the order, as of February 13, 2026, all contractors must pay Royalty Oil, Tax Oil, and Profit Oil directly to the Federation Account.
8. Joint team between NUPRC, NMDPRA
The president’s order establishes a joint project team to handle petroleum operations where upstream and midstream activities are combined, with the NUPRC serving as the primary interface.
Stakeholders, experts divided
Giving his comment on the order, Energy expert Dr Joseph Obele told Legit.ng outlined the possible positive impact of the move on the operations of the NNPCL. He stated that it may reduce revenue leakages, “and ensure full remittance of national resources” to the federation account.
“The Order may (also) compel NNPCL to operate strictly as a commercial entity, focusing on profitability and cost efficiency, rather than relying on retained government funds,” he added.
However, he noted that it may weaken NNPCL’s operational flexibility and discourage long-term capital investment.
Dr Obele, who lectures at the Ignatius Ajuru University of Education and serves as spokesperson for the Petroleum Retailers Association of Nigeria (PETROAN), also expressed concerns over possible job losses at the NNPCL.
“NNPCL and its subsidiaries may experience workforce reductions as part of cost-cutting measures,” he warned.
PENGASSAN weighs in
Also, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) raised concerns over possible job losses in the NNPC and the country’s oil and gas industry as a result of the order.
Speaking in Lagos, PENGASSAN President, Festus Osifo, said the restructuring of oil revenues by the President may destabilise operations within the sector, particularly at NNPCL, and could lead to significant job cuts if not carefully implemented.
While he acknowledges the government’s intention to strengthen fiscal accountability, workforce stability must also be considered. He insists that the reform could also weaken investors.
Source: Facebook
Areas of conflict
It is worth noting that the executive order is in conflict with sections of the PIA. For instance, sections 9, 52 and 64 of the PIA established the Frontier Exploration Fund (FEF) and mandate the NNPCL to deduct 30% as Management Fee.
The Executive Order redirects these funds to the Federation Account without legislative amendment, and without clear notes on how the goal to develop frontier basins will not be derailed or abandoned.
In sum, President Bola Tinubu’s executive order marks a significant shift in Nigeria’s oil and gas revenue architecture, with far-reaching fiscal and institutional implications. While the directive is framed as a move to deepen transparency, boost Federation Account inflows, and enforce commercial discipline at the NNPCL, it has also triggered legitimate concerns around legal consistency with the Petroleum Industry Act (PIA), operational sustainability, investor confidence and workforce stability.
Analyst reacts to Tinubu's executive order
Legit.ng earlier reported that Richard Akinfele, an oil industry analyst, examined the possible risks that the move may bring, just as he also considered the arguments of those backing the order.
Akinfele noted that the executive order has reopened fundamental questions about financial autonomy, investor confidence and the long-term sustainability of the NNPCL.
The Lagos-based analyst also spoke on whether the president's move is in line with the constitution or not.
Source: Legit.ng
