Tinubu’s Executive Order Redirects Oil Revenues to Federation Account, Signals Major Fiscal Reset

President Bola Ahmed Tinubu has signed a far-reaching executive order mandating the direct remittance of oil and gas revenues into the Federation Account, in what the Presidency describes as a decisive move to block leakages, boost public finances and reposition the nation’s petroleum sector for efficiency and transparency. The directive, grounded in constitutional provisions that vest control of mineral resources in the Federal Government, is designed to restore the revenue-sharing structure among federal, state, and local governments and strengthen Nigeria’s fiscal stability. At the heart of the reform is a restructuring of the revenue framework created by the Petroleum Industry Act, which the government says allowed multiple deductions that significantly reduced the inflow of oil income into the Federation Account. Under the previous arrangement, the Nigerian National Petroleum Company Limited retained 30 per cent of profit oil and gas as a management fee, in addition to keeping 20 per cent of its profits for operational costs and future investments. Another 30 per cent was allocated to the Frontier Exploration Fund. According to the Presidency, these layers of deductions diverted more than two-thirds of potential national oil revenue before it could be shared among the three tiers of government. With the new order, NNPC Limited will no longer collect the 30 per cent management fee nor control the Frontier Exploration Fund. The affected revenues are to be paid directly into the Federation Account. Oil and gas operators working under production sharing, profit sharing and risk service contracts are also now required to remit royalty oil, tax oil, profit oil, profit gas and all other government entitlements straight to the central revenue pool. The move effectively eliminates intermediary structures that previously handled the funds and is expected to significantly increase distributable income at monthly FAAC allocations. The directive also halts the payment of gas-flaring penalties into the Midstream and Downstream Gas Infrastructure Fund, with such proceeds now to be channelled into the Federation Account. The government maintains that this will eliminate duplication, as the PIA already provides for an Environmental Remediation Fund funded through separate contributions for host community rehabilitation. All future spending from the gas infrastructure fund will now be subject to public procurement laws, a measure aimed at tightening accountability. Beyond revenue recovery, the executive order seeks to redefine the role of NNPC Limited as a purely commercial entity. The Presidency expressed concern that the company’s previous position as both a concessionaire and a commercial operator created competitive distortions and weakened its transition into a profit-driven national energy company. By removing cost-influencing powers tied to revenue retention, the reform is expected to align the NNPC with global best practices and improve investor confidence in Nigeria’s oil and gas sector. Officials say the policy has urgent national implications, particularly for budget implementation, debt management, and funding of priority sectors such as security, healthcare, education, and energy transition. With oil revenue still a major pillar of government income, the administration believes the new framework will provide more predictable cash flow to support economic planning and reduce reliance on borrowing. To ensure effective execution, the President has approved an inter-ministerial implementation committee comprising key figures from the finance, justice, budget, and petroleum sectors, alongside the revenue service and the Budget Office. The administration has also signalled a broader review of the PIA in consultation with stakeholders to address what it described as fiscal and structural anomalies in the law.