ABUJA, Nigeria — President Bola Tinubu on 13 February 2026 signed an Executive Order (Order No. 9 of 2026) mandating that all oil and gas revenues – including royalties, taxes, profit oil and profit gas – be remitted directly into Nigeria’s Federation Account. The order is now gazetted. It represents a sharp reversal of key provisions in the 2021 Petroleum Industry Act (PIA). These provisions had allowed overlapping deductions on crude proceeds.
Earlier, the Nigerian National Petroleum Company (NNPC) retained a 30% management fee on profit oil and gas. It also kept a 30% Frontier Exploration Fund under Production Sharing Contracts.
The new policy abolishes these fees. As a result, what the Presidency calls the constitutional revenue entitlements of the federal, state, and local governments are restored.
Nigeria’s oil sector is pivotal to federal budgets. Under the new EO, all oil and gas revenues will flow to the Federation Account. This nullifies industry practice. NNPC’s combined 60% deductions had “far exceed[ed] global norms.” They diverted over two-thirds of potential remittances.
The Treasury notes that despite rising oil output and prices, federal inflows were declining due to such deductions.
Tinubu’s statement stresses that “oil and gas revenues must serve the Nigerian people first.” This reform is about “fairness and fiscal responsibility” for security, education, healthcare, and other priorities.
Key Provisions of the Order
The Executive Order imposes several immediate changes to fiscal flows in the oil industry. Notable measures include:
• Abolishing NNPC’s 30% fees: NNPC Limited will no longer collect the 30% management fee on profit oil and gas. It will also no longer retain 30% of profits for the Frontier Exploration Fund. The government argues that NNPC’s existing 20% profit retention already covers its operational needs.
• Direct remittance by operators: Starting from 13 February 2026, all contractors under Production Sharing Contracts must pay royalties, tax oil, profit oil, and profit gas directly into the Federation Account. This “blocks deductions at source,” ensuring no layer of charges dilutes the revenue.
• Redirecting gas-flare penalties: Payments of the gas-flare penalty (previously channeled to the Midstream Gas Infrastructure Fund) are suspended. Instead, all flaring penalties will now go into the Federation Account, with any MDGIF expenditures subject to standard procurement rules.
• Clarifying regulatory mandates: The order resolves overlaps between regulators, such as NUPRC and the Midstream/Downstream Authority. It also curbs duplicative structures in the PIA. A joint project team will be set up (with NUPRC as interface for joint operations) to streamline upstream‐midstream activities.
These reforms are explicitly aimed at eliminating “multiple layers of charges” that had weakened budgetary allocations.
In effect, they restore the flow of statutory revenues. Under Section 162 of the Constitution, 13% of all mineral revenues are due to oil-producing states. The federal and local shares come from the balance.
Arresting the revenue leakage from NNPC’s fees is crucial. The EO is expected to increase the size of the Federation Account. This will thus affect every tier’s budget.
Implications for Finance and Governance
Analysts say the EO has major fiscal and political implications. Budget officials had reported that Nigeria was losing 60% of its gross oil revenue. These losses were due to deductions under the PIA. With those cuts removed, government coffers stand to gain quickly.
The Budget Office has warned that declining oil inflows – despite production gains – have constrained social and infrastructure spending. This order thus buys room to strengthen national security and public services, as Tinubu emphasises, without new taxes.
For oil-producing states and local governments, the impact is also positive. By channelling more oil proceeds into the Federation Account, their automatic 13% derivation shares will rise.
For context, nine oil states received over ₦620 billion in just the first five months of 2025 (a 13% share). Greater inflows could mean tens of billions more for state budgets and developmental projects.
This could soothe longstanding demands by host communities for more of their resource wealth, aligning with Tinubu’s “Nigeria First” pledge.
However, the reforms curtail NNPC’s established funding. The state oil firm will lose nearly ₦300 billion a year that was earmarked for frontier exploration and administration.
NNPC will henceforth operate strictly as a commercial enterprise, focusing on core functions. Observers note that NNPC’s dual role as concessionaire and market actor is being unwound. This role allowed it to inflate costs in the past.
In short, the order forces the company to transition in earnest to a profit-driven model, as envisaged by the PIA.
In global terms, the EO sends a message to investors that Nigeria aims to make its oil sector more transparent and efficient.
The Presidency itself links the reform to “budgeting, debt sustainability, economic stability and the well-being of Nigerians”. By tightening revenue flows, Nigeria may shore up its fiscal balance sheet and credit outlook.
Critics of the PIA had warned that allowing NNPC to rack up large idle cash balances (e.g. in the frontier fund) was discouraging investment. This order could counter such concerns and reassure stakeholders that more of Nigeria’s oil wealth will accrue to the public.
Implementation and Enforcement Mechanisms
The Executive Order is legally binding at once but will require vigilant enforcement. To accomplish this, President Tinubu has set up an Inter-Agency Implementation Committee. It includes the Finance Minister, who serves as chair, the Attorney-General, budget and petroleum officials, the Nigeria Revenue Service, and others.
This body is tasked with coordinating the EO’s rollout and resolving any institutional conflicts. It will liaise with the Upstream Commission and other regulators to ensure compliance at the wellhead.
Importantly, the EO is described as an interim measure pending statutory change. The government has “chipped away at” sections of the PIA through executive fiat. This action has effectively set the stage for legislative amendments.
The EO itself references constitutional requirements (Sections 5 and 44) for mineral revenue flows. Agencies like the NUPRC and NMDPRA will likely issue implementing guidelines. They may also enforce licenses conditioned on direct payment into the Federation Account. Companies that fail to comply could face sanctions under the new regulatory clarifications.
In practice, oversight will come from several fronts. The Economic Management Team is led by the Finance Minister. The team has already been tasked to recommend the optimal “way forward” on these fiscal issues.
The National Assembly will likely be engaged to amend the PIA and Revenue Act for permanent effect. Meanwhile, the existence of the Implementation Committee suggests there will be regular progress reports to the Presidency.
Tinubu’s administration has emphasised transparency, so public audits of oil revenues may be stepped up. Any funds wrongly diverted could be challenged in court. This could happen, for example, if NNPC tried to retain fees anyway. The EO is now federal policy.
In short, the EO’s enforcement rests on executive authority backed by a high-level task force. It commands that contracts be paid according to the new rule. The gazette states, “All operators/contractors of oil and gas assets…shall…pay [their dues] directly to the Federation Account.”
For the first time, even gas flaring fines must follow constitutional remittance. These clear directives, along with anticipated audits and possible legal action, give the order real teeth.
Wider Context and Next Steps
The order comes amid continued debate over Nigeria’s oil laws. Tinubu has concurrently approved a comprehensive review of the PIA with stakeholders to fix “structural and fiscal anomalies”.
This suggests more reforms ahead, potentially in areas like the derivation formula or tax incentives. Some industry analysts see this move as the beginning of rebalancing the sector in favour of the public interest.
Civil society groups, especially from the Niger Delta, welcomed the attempt to stop leakages. They also stress the need for constitutional compliance.
One forum provided an example. An EO could similarly be used to ensure that the 13% derivation fund reaches host communities. This would happen as intended.
In other words, Nigeria’s resource governance could see a broader overhaul following this oil revenue reform.
In conclusion, President Tinubu’s announcement signals a decisive break from past practice. His administration is restoring direct payment of oil rents to the Federation Account. This change explicitly prioritises national revenue. It places national revenue over parastatal entitlements.
If effectively implemented, the order should plug a major source of fiscal losses and strengthen all tiers of government. As the Presidency put it,
“Nigeria can no longer afford leakage where there should be leadership”.
The true test will be in enforcement. For now, the message is clear. Oil revenues will serve Nigerians first.
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