President Bola Ahmed Tinubu has issued a sweeping executive order that could fundamentally reshape Nigeria’s oil revenue architecture, stripping the Nigerian National Petroleum Company Limited, NNPC Ltd, of major retention powers and redirecting billions of naira directly to the Federation Account.
In the directive signed under constitutional authority, the President moved to halt multiple deductions embedded in the Petroleum Industry Act, PIA, describing them as wasteful, duplicative, and responsible for the steady decline in net oil revenue available to federal, state, and local governments.
At the heart of the reform is the immediate termination of NNPC’s controversial 30 percent management fee on profit oil and gas, alongside the scrapping of the 30 percent Frontier Exploration Fund. These two provisions together diverted more than two thirds of potential national oil earnings away from the Federation Account.
Under the new order, all royalty oil, tax oil, profit oil, and gas revenues from production sharing and related contracts must now be paid directly into the Federation Account, effectively ending NNPC’s long standing control over these revenue streams.
The President also suspended payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund, directing that such proceeds flow instead to the Federation Account and be spent strictly under public procurement laws.
Major consequences for NNPC
Industry analysts say the order delivers the most significant fiscal shake up since the passage of the PIA in 2021, with far reaching implications.
NNPC faces severe revenue loss as the company stands to lose access to tens of billions of dollars previously retained under management fees, frontier exploration allocations, and layered deductions.
The order also forces a commercial transition by removing quasi sovereign revenue privileges and pushing NNPC closer to operating as a true commercial oil company rather than a hybrid state revenue custodian.
Direct remittances to the Federation Account are expected to heighten transparency and oversight, tightening fiscal discipline while potentially exposing inefficiencies previously hidden within complex deduction structures.
Reduced retained earnings may also create operational strain, constraining NNPC’s investment capacity, financing leverage, and exploration ambitions, particularly in frontier basins long championed by the company.
Tinubu targets fiscal leakages
The Presidency argued that existing PIA structures allowed excessive deductions that far exceeded global norms, draining funds urgently needed for security, education, healthcare, and energy transition priorities.
President Tinubu warned that speculative frontier exploration funds risked accumulating idle cash while Nigeria grappled with debt pressure and budget shortfalls, insisting that restoring constitutional revenue flows to the Federation is now a matter of national urgency.
He also ordered a broader review of the Petroleum Industry Act, signaling that deeper structural reforms to Nigeria’s oil governance framework may be imminent.
Implementation machinery activated
A high level inter ministerial committee comprising the Ministers of Finance, Justice, Budget and Planning, and Petroleum Resources, alongside top revenue and energy officials, has been constituted to enforce the directive and oversee integrated petroleum operations nationwide.
With the order already gazetted and effective from February 13, 2026, Nigeria’s oil sector now faces a defining transition, one that could strengthen public finances while simultaneously testing the commercial resilience of NNPC in a rapidly changing energy landscape.
The coming months will determine whether Tinubu’s bold intervention delivers fiscal salvation for the Federation, or triggers a new era of turbulence in the nation’s most strategic industry.
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