…recommend legislative consultation to ensure alignment with constitutional, legal frameworks
“Distinguishing contractual, corporate, statutory revenues critical for fiscal integrity – Prof. Iledare
NNPC’s dual role -commercial operator & concessionaire- needs clarity to avoid institutional tensions – Dr. Oni warns
Damcida calls for $/bbl benchmarking and proper oversight to safeguard revenues
Oredola Adeola
Analysts say President Bola Tinubu’s new oil and gas revenue Executive Order (EO) on Direct Remittance of Oil and Gas Revenues marks a major fiscal reform to boost transparency, strengthening NNPC’s commercial function, curb discretionary revenue retention, and strengthen government finances.
They stressed that its long-term effectiveness would depend on legislative backing to ensure constitutional alignment and institutional stability.
Prof.Emeritus Wumi Iledare, Chair of Oil, Gas, and Energy Policy Forum and Executive Director of Emmanuel Egbogah Foundation, Dr. Ayodele Oni, Partner and Chair of the Energy & Natural Resources Practice Group at Bloomfield Law, and Ahmad Damcida, CEO Energy Culture / Founder, Foltai Technologies made this known in a conversation with Advisors Reports.
Prof. Iledare described the EO as a significant fiscal intervention aimed at enhancing transparency, reducing discretionary retention, and improving statutory remittances to Nigeria’s three tiers of government.
While acknowledging the administration’s objectives to safeguard public revenues, curb inefficiencies, and strengthen fiscal discipline amid budgetary and debt pressures, Prof. Iledare cautioned that aspects of the Order intersect with statutory provisions of the Petroleum Industry Act (PIA) 2021, such as the Frontier Exploration Fund, the Midstream and Downstream Gas Infrastructure Fund, and Production Sharing Contract fiscal structures, which are legislatively established.
He emphasized that substantive changes to these statutory fiscal frameworks ideally require legislative action to ensure constitutional alignment and institutional stability.
Prof. Iledare also highlighted the technical need to distinguish between contractual revenue allocations under PSCs, corporate retained earnings of NNPC Limited, and statutory earmarked funds under the PIA to avoid conflating contractual entitlements with discretionary fiscal practices.
On the direct remittance of royalty oil, tax oil, and profit oil to the Federation Account, he noted the potential benefits for transparency and revenue visibility but stressed that implementation must be carefully sequenced to preserve contractual stability and investor confidence.
He also pointed out the dual role of NNPC Limited as both commercial operator and concessionaire, underlining that reforms must strengthen NNPC’s commercial function within a clear legal and governance framework.
Prof. Iledare recommended prompt legislative consultation, transparent stakeholder engagement, clear implementation guidelines, and a sequenced reform approach that balances fiscal urgency with institutional stability, noting that Nigeria’s petroleum sector remains central to national economic stability.
“Reforms that improve transparency and fiscal integrity are welcome… but sustainable change must align with constitutional processes, statutory frameworks, and investor predictability” the Professor Emeritus of Economics cautioned.
Dr. Oni, on his part, described the Order as a major step toward fiscal reform, aimed at improving transparency, curbing discretionary revenue retention, and optimizing the flow of petroleum revenues to Nigeria’s three tiers of government.
He noted that Sections 80 and 162 of the Nigerian Constitution support the overarching goal of ensuring federation revenues are paid into the designated Federation Account.
The key question, he said, is whether these changes should be implemented through legislative amendments to the Petroleum Industry Act (PIA) by the National Assembly, rather than solely by executive action.
“There are two perspectives…one suggests that certain PIA provisions may conflict with the Constitution, in which case the Executive Order realigns processes with constitutional requirements.
“The other maintains that, if provisions are unconstitutional, the judiciary has the authority to nullify them and direct the legislature to enact corrective measures,” Dr. Oni explained.
He further emphasized that critical statutory constructs such as the Frontier Exploration Fund, the Midstream and Downstream Gas Infrastructure Fund, and existing Production Sharing Contracts are established by parliamentary law.
While the President’s authority under Section 5 permits enforcement of laws, Dr. Oni stressed that substantive alterations to these frameworks ideally require legislative backing to ensure constitutional coherence and long-term institutional stability.
Dr. Oni also highlighted the dual role of NNPC Limited as both a commercial operator and concessionaire, which has historically created institutional tensions.
Reforms that aim to strengthen NNPC’s commercial identity, he said, must be guided by clear legal principles and predictable governance structures to avoid ambiguities.
“In the short term, the Order may affect NNPC’s revenue streams and incentivize greater innovation and operational efficiency,”
“Overall, while this is a positive step for fiscal reform, its success over the long term depends on alignment with constitutional and legislative frameworks, underscoring the importance of legally informed, carefully sequenced reforms,” Partner and Chair of the Energy & Natural Resources Practice Group at Bloomfield Law said.
Ahmad Dancidda, observed that while fee deductions and contributions to concessionary intervention funds are common in the sector, they should not overshadow the importance of establishing a transparent and well-defined social budgeting framework — specifically, the projected cost of running Nigeria expressed as a $/bbl benchmark approved by the National Assembly.
He noted that such deductions often distort the revenue allocations to the three arms of government, citing examples where NNPC has made deductions from funds intended for the Federation Account without proper governmental oversight.
Dancidda emphasised that the National Assembly must be fully engaged in this responsibility.
