… ends deductions under PIA
… orders NNPC to remit royalties, taxes, profit oil & gas directly, retains 20% for operations
Oredola Adeola
President Bola Tinubu has signed an Executive Order directing those certain oil and gas revenues previously retained by NNPC Limited — including 30% management fees and 30% frontier exploration allocations tied to production-sharing, profit-sharing, and risk-service contracts — be paid directly into the Federation Account.
The directive removes these deductions and mandates that royalties, taxes, profit oil, and profit gas due to the Federation be remitted straight to government coffers, while allowing NNPC Limited to retain its existing 20% profit allocation for working capital and future investments.
Bayo Onanuga, Special Adviser to the President on Information and Strategy, made this known in a statement released on Wednesday and obtained by Advisors Reports,
According to him, the EO is expected to restore the constitutional revenue entitlements of the Federal, State, and Local Governments, which were reduced in 2021 under the Petroleum Industry Act (PIA).
This includes the 30% of the Federation’s oil revenues previously retained by NNPC Limited as a management fee on Profit Oil and Profit Gas from Production Sharing, Profit Sharing, and Risk Service Contracts.
He explained, “The EO is expected to safeguard and enhance oil and gas revenues for the Federation, curb wasteful spending, eliminate duplicative structures in this critical sector of the national economy, and redirect resources for the benefit of the Nigerian people.
“The President signed the EO in pursuance of Section 5 of the Constitution of the Federal Republic of Nigeria (as amended).
“The Executive Order is anchored on Section 44(3) of the Constitution, which vests ownership, control, and derivative rights in all minerals, mineral oils, and natural gas in, under, and upon any land in Nigeria, including its territorial waters and Exclusive Economic Zone, in the Government of the Federation.”
Onanuga noted that the PIA created structural and legal channels through which substantial Federation revenues were lost through deductions, fees, and other charges.
Under the current framework, NNPC Limited retains 30% of the Federation’s oil revenues as a management fee, in addition to 20% of its profits for working capital and future investments, and another 30% under the Frontier Exploration Fund, which he said risks accumulating idle funds for speculative exploration at a time when resources are urgently needed for core national priorities such as security, education, healthcare, and energy transition investments.
He also highlighted the Midstream and Downstream Gas Infrastructure Fund (MDGIF), funded by gas flaring penalties, noting that Section 103 of the PIA already establishes a dedicated Environmental Remediation Fund administered by NUPRC to rehabilitate communities impacted by petroleum operations.
“All these deductions far exceed global norms and effectively divert more than two-thirds of potential remittances to the Federation Account.
“The continuing decline in net oil revenue inflows is largely attributable to these deductions and fragmented oversight under the current PIA architecture,” he said.
The Executive Order aims to resolve, among others, the duplicative 30% deduction for Profit Sharing arrangements by addressing overlapping provisions across relevant laws and regulatory instruments.
It seeks to eliminate unjustified multiple layers of deductions that erode revenues intended for the Federation Account, enabling all three tiers of government to pursue critical national priorities.
Onanuga further said the President identified structural concerns regarding NNPC Limited’s continued role as a concessionaire under Production Sharing Contracts.
“The existing framework, which allows the company to influence operating costs while simultaneously functioning as a commercial entity, creates potential competitive distortions and undermines its transition into a fully commercial operator as envisioned under the PIA,” he explained.
The EO 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 reforms are of urgent national importance given their implications for budgeting, debt sustainability, economic stability, and the well-being of Nigerians.
The administration also plans a comprehensive review of the PIA in consultation with stakeholders to address fiscal and structural anomalies.
Advisors Reports gathered that based on the gazetted Executive Order:
NNPC Limited will no longer collect or manage the 30% Frontier Exploration Fund, and the 30% profit from oil and gas currently earmarked for this fund will be transferred to the Federation Account.
NNPC Limited will no longer receive the 30% management fee on profit oil and gas revenues, which shall also go to the Federation Account.
All operators and contractors under production sharing contracts are required, from February 13, 2026, to pay royalties, taxes, profit oil, profit gas, and other government interests directly into the Federation Account.
Payments of gas flare penalties into the MDGIF are suspended; all proceeds from penalties will now go to the Federation Account, while any MDGIF expenditure must comply with public procurement laws.
A joint project team has been constituted to execute integrated petroleum operations, with the Commission serving as the interface with licensees and lessees.
An implementation committee has been established to oversee and ensure effective, coordinated execution of the Executive Order, comprising key ministers, the Chairman of the Nigeria Revenue Service, representatives of the Ministry of Justice, the President’s Special Adviser on Energy, and the Director-General of the Budget Office, which will provide secretarial support.
The members of the committee include 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 and the Minister of State, Petroleum Resources (Oil).
Other members of the Committee are the Chairman, Nigeria Revenue Service; a Representative of the Ministry of Justice; the Special Adviser to the President on Energy; and the Director-General, Budget Office of the Federation.
The latter will provide a secretariat to the committee.
