President Bola Ahmed Tinubu has signed a landmark Executive Order mandating the direct remittance of all oil and gas revenues into the Federation Account.
The move is aimed at safeguarding national resources, curbing wasteful spending, and eliminating duplicative structures within Nigeria’s petroleum sector.
The order, signed under Section 5 of the Constitution, is anchored on Section 44(3), which vests ownership and control of mineral resources in the Federal Government.
Tinubu’s directive seeks to restore constitutional revenue entitlements of the Federal, State, and Local Governments, which were eroded by provisions of the Petroleum Industry Act (PIA) of 2021.
Key Highlights of the Executive Order
- NNPC Limited Restrictions:
- No longer entitled to the 30% management fee on profit oil and gas revenues.
- Required to remit the 30% Frontier Exploration Fund directly to the Federation Account.
- Repositioned strictly as a commercial enterprise, ending its dual role as concessionaire under production sharing contracts.
- Gas Flare Penalties:
- Payments into the Midstream and Downstream Gas Infrastructure Fund (MDGIF) suspended.
- All proceeds from gas flare penalties to be remitted directly into the Federation Account.
- Revenue Transparency:
- All operators under production sharing contracts must remit royalties, taxes, and profits directly to the Federation Account.
- Elimination of overlapping deductions that previously diverted more than two-thirds of potential revenues.
- Implementation Oversight:
- A high-level committee has been constituted, including the Ministers of Finance, Justice, Budget and National Planning, Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, and other senior officials.
- The Budget Office of the Federation will serve as the secretariat.
President Tinubu’s Position
Tinubu stressed that the reforms are of urgent national importance, citing their implications for budgeting, debt sustainability, and economic stability.
“The Executive Order introduces immediate measures to curb leakages, enhance transparency, eliminate duplicative structures, and reposition NNPC Limited strictly as a commercial enterprise, while safeguarding the Federation’s interests,” the President affirmed.
He also announced plans for a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address fiscal and structural anomalies.
This directive marks one of the most sweeping reforms in Nigeria’s oil and gas sector since the enactment of the PIA, with expectations that it will significantly boost revenue inflows and strengthen the country’s economic foundation.
