THE era of discretionary oil revenue deductions by the Nigerian National Petroleum Company Limited appears to be over as President Bola Tinubu has ordered the direct remittance of oil and gas proceeds into the Federation Account, effectively ending what critics described as a “money show” under the existing framework.
News Point Nigeria reports that in a sweeping Executive Order signed on February 13, 2026, the President mandated that revenues accruing from Nigeria’s oil and gas resources be paid directly to the Federation Account, bypassing retention structures that had allowed significant deductions by NNPC Limited.
The Presidency described the directive as a decisive intervention aimed at curbing leakages, eliminating duplicative deductions, and restoring constitutional revenue entitlements to the federal, state, and local governments.
The Executive Order, issued pursuant to Section 5 of the 1999 Constitution (as amended), is anchored on Section 44(3), which vests ownership and control of all minerals, mineral oils, and natural gas in the Government of the Federation.
At the heart of the reform is a reversal of revenue mechanisms introduced under the Petroleum Industry Act (PIA) of 2021. According to the Presidency, the PIA created structural and legal channels through which substantial oil revenues were deducted before reaching the Federation Account.
Under the PIA framework, NNPC Limited retained 30 percent of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts. In addition, the company retained 20 percent of its profits for working capital and future investments.
Federal authorities argued that the additional 30 percent management fee was unjustified, given that the existing 20 percent retained earnings were already sufficient to fund the company’s operational responsibilities.
Beyond the management fee, NNPC also retained another 30 percent of profit oil and profit gas under Production Sharing, Profit Sharing, and Risk Service Contracts as the Frontier Exploration Fund, in line with Sections 9(4) and (5) of the PIA.
The Presidency described the size of the fund as excessive and inconsistent with global best practices, warning that such large allocations to speculative frontier exploration risked tying down resources urgently needed for national priorities.
With the new Executive Order, NNPC Limited will no longer collect or manage the 30 percent Frontier Exploration Fund. Instead, the 30 percent profit oil and profit gas previously earmarked for frontier exploration will now be transferred directly to the Federation Account.
Similarly, the company will cease collecting the 30 percent management fee on profit oil and profit gas revenues due to the Federation.
The move signals a major shift in Nigeria’s oil revenue architecture and reinforces the Federal Government’s determination to centralize remittances, strengthen fiscal discipline, and enhance transparency in the management of petroleum resources.
In a significant restructuring of oil revenue flows, all operators and contractors holding oil and gas assets under Production Sharing Contracts are now required to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other government-entitled proceeds directly into the Federation Account.
The measure takes immediate effect from February 13, 2026.
President Tinubu also suspended payments of Gas Flare Penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Instead, all such penalties will now be paid directly into the Federation Account.
While the MDGIF will continue to exist, its expenditures must now comply strictly with public procurement laws and regulations.
The Presidency argued that existing provisions under Section 103 of the PIA already established an Environmental Remediation Fund administered by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), making certain gas-related deductions redundant.
Beyond financial adjustments, the Executive Order addresses structural issues surrounding NNPC Limited’s dual role as concessionaire and commercial operator under Production Sharing Contracts.
According to the Presidency, the current framework allowed NNPC to influence operating costs while functioning as a commercial entity, creating potential competitive distortions and undermining its transformation into a fully commercial operator as envisioned by the PIA.
The Order therefore repositions NNPC strictly as a commercial enterprise while safeguarding the Federation’s interests.
To ensure effective implementation, the President approved the establishment of an Implementation Committee chaired by key economic and legal officials, including: 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, the Minister of State for Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, the Special Adviser to the President on Energy and the Director-General of the Budget Office of the Federation.
A joint project team has also been constituted to coordinate integrated petroleum operations where upstream and midstream activities are combined.
President Tinubu described the reforms as urgent and of national importance, citing their implications for national budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians.
He further indicated that his administration would undertake a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address fiscal and structural anomalies identified since its enactment.
The Executive Order has been officially gazetted.