President Bola Tinubu has signed an executive order that fundamentally reshapes the management of Nigeria’s oil and gas revenues, directing that all proceeds from crude sales, royalties, taxes, and related payments must now flow directly into the Federation Account without any prior deductions by the Nigerian National Petroleum Company Limited (NNPCL).
Announced on February 26, 2026, the order eliminates the 30% management fee previously retained by NNPCL for operational and administrative services. It also abolishes the Frontier Exploration Fund, which had been allocated a portion of revenues to support exploration in frontier basins such as the Chad Basin and inland areas.
Under the new directive:
– All payments for Royalty Oil, Tax Oil, Profit Oil, and gas flaring penalties are to be remitted straight to the Federation Account.
– NNPCL is prohibited from withholding any portion of oil revenues for its own use or discretionary purposes.
The move is intended to enhance transparency, eliminate revenue leakages, and ensure fuller remittances to the three tiers of government—federal, state, and local—thereby increasing monthly allocations to the Federation Account.
Proponents view the order as a decisive step toward fiscal discipline and accountability in the oil sector. Energy analyst Dr. Joseph Obele highlighted the potential for reduced inefficiencies and improved revenue flows to support national development priorities. He noted that forcing NNPCL to operate more like a commercial entity could drive greater operational efficiency over time.
However, the policy has sparked concerns over its immediate and longer-term implications. The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) warned that the removal of the management fee and associated funding streams could lead to significant cost-cutting measures at NNPCL, including potential job losses and reduced capacity for frontline operations.
Legal experts have raised questions about the order’s compatibility with provisions of the Petroleum Industry Act (PIA) 2021, which explicitly authorised the management fee and the Frontier Exploration Fund. Critics argue that overriding these statutory mechanisms via executive action—without fresh legislative amendment—may expose the policy to legal challenges and create uncertainty for investors in Nigeria’s upstream sector.
The order comes at a time when the federal government is seeking to strengthen fiscal buffers, reduce dependence on borrowing, and improve public trust in revenue management. By centralising inflows and minimising discretionary deductions, authorities aim to deliver more predictable and higher statutory allocations to states and local governments.
Market observers and development stakeholders will closely monitor the implementation phase, including NNPCL’s response, the impact on exploration activities in frontier basins, and any potential adjustments to the company’s capital and operational budgets. While the executive order promises greater transparency and efficiency in oil revenue handling, its success will hinge on effective enforcement, legal robustness, and the ability to balance accountability with operational continuity in one of Nigeria’s most critical economic sectors.
