Follow Us on Google
By Chinwendu Obienyi
Nigeria’s public finances may be heading into choppy waters as more control over oil and gas revenue shifts to the Presidency, a new report by SBM Intelligence has warned.
The report comes days after President Bola Tinubu signed an executive order aimed at tightening the management of oil and gas earnings.
The directive seeks 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.”
Under the order, all government earnings from oil and gas production, including Royalty Oil, Tax Oil, Profit Oil and Profit Gas, will now be paid directly into the Federation Account from February 13, 2026.
“Effective February 13, 2026, all Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and other government entitlements under Production Sharing and related contracts will be paid directly into the Federation Account, enabling the three tiers of government to pursue critical national priorities,” the order stated.
In simple terms, this means that revenue which may previously have passed through different agencies or arrangements will now go straight to the central pool shared by the federal, state and local governments.
But while the federal government says the move will block leakages and improve accountability, SBM Intelligence believes the decision could have far-reaching consequences.
In its report titled The Noose Tightens: Analysing the Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Clarity 2026, the firm described the development as one of the most significant changes to Nigeria’s public finance structure since the passage of the .
According to SBM Intelligence, the centralisation of revenue control could reshape the balance of power between government institutions, the states and the Presidency.
Although the administration has presented the policy as a fix for “opaque” financial channels and a way to ensure compliance with the Constitution, the report warns that the long-term risks should not be ignored.
“One major concern is institutional strain,” SBM Intelligence said. It explained that the Petroleum Industry Act was designed to clearly separate responsibilities in the oil and gas sector, with regulators, commercial operators and fiscal managers each playing distinct roles.
“By reassigning revenue flows through executive directive, the government risks blurring these lines and weakening the autonomy of agencies established by law,” the report noted.
In everyday terms, this means agencies created to operate independently could become more reliant on presidential decisions. Over time, that could weaken the system of checks and balances.
The report also raised constitutional questions. Some of the revenue channels now being redirected were originally approved under laws passed by the National Assembly. This raises the possibility of legal disputes over whether an executive order can override or suspend provisions already set out in legislation.
Other News
If court cases drag on, SBM Intelligence warned, it could create uncertainty around revenue collection, delay payments into the Federation Account and make it harder for governments to plan their budgets.
State governments may also feel the effects.
Nigeria’s revenue-sharing formula depends heavily on oil income paid into the Federation Account. In theory, plugging leakages and centralising payments could increase the total amount available for sharing.
However, the report pointed out that centralisation also gives more power to the centre in deciding what qualifies as revenue that must be paid in.
“Nigeria’s revenue-sharing formula relies heavily on oil-derived inflows to the Federation Account. While centralisation could theoretically increase distributable funds by plugging leakages, it also concentrates interpretive authority over what qualifies as remittable revenue,” the report said.
For states already struggling with heavy debt and low internally generated revenue, this could mean even greater dependence on Abuja.
Investors are another key concern.
Oil companies, both international and local, often rely on stability clauses in their contracts to protect them from sudden fiscal changes. SBM Intelligence cautioned that if investors see the executive order as altering established frameworks, it could trigger disputes or even arbitration.
Even if no formal legal action is taken, uncertainty alone could discourage fresh investment in the oil and gas sector, Nigeria’s main source of foreign exchange.
The report also highlighted practical challenges. Managing oil and gas revenue involves complex calculations, production-sharing contracts and joint venture arrangements. Implementing sweeping changes within a short timeframe could create administrative bottlenecks.
“A compressed implementation timeline could create administrative bottlenecks or errors, undermining the very efficiency gains the reform seeks to achieve,” SBM Intelligence noted.
All of this is happening at a time when Nigeria’s fiscal position is already under strain. Rising debt servicing costs, subsidy reforms and exchange rate volatility have tightened government finances.
While a centralised model could improve cash flow in the short term, SBM Intelligence stressed that transparency, parliamentary oversight and legal clarity will be crucial.
In its words, “The success of the centralisation drive will depend not only on how much additional revenue reaches the Federation Account, but on whether institutional checks, investor confidence and federal balance can withstand the strain of concentrated power.”
For now, Nigeria stands at what the report calls a fiscal crossroads, where efforts to plug leakages and boost revenue must be carefully balanced against the need to protect institutions, reassure investors and preserve the federal structure.
