Tinubu signs order to slash NNPC deductions

To boost oil revenues to Federation Account

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By Juliana Taiwo-Obalonye, Abuja

President Bola Tinubu has signed an executive order mandating direct remittance of oil and gas revenues to the Federation Account, scrapping hefty deductions by NNPC Limited and curbing revenue leakages under the Petroleum Industry Act (PIA), according to a statement issued by his Special Adviser on Information and Strategy, Bayo Onanuga.

The order, gazetted on Wednesday and effective from February 13, targets duplicative structures that have diverted over two-thirds of potential inflows amid declining net oil revenues. It restores constitutional entitlements for federal, state and local governments, invoking Sections 5 and 44(3) of the 1999 Constitution.

Under the order, NNPC loses its 30 per cent management fee on profit oil and gas from Production Sharing Contracts (PSCs), Profit Sharing Contracts and Risk Service Contracts — deemed unjustified given the company’s existing 20 per cent profit retention for operations and investments.

The 30 per cent Frontier Exploration Fund contributions, previously held by NNPC for speculative drilling, will now go straight to the Federation Account to fund priorities such as security, education, healthcare and energy transition.

Gas flare penalty payments to the Midstream and Downstream Gas Infrastructure Fund (MDGIF) are halted, with proceeds routed to the Federation Account instead; future MDGIF spending must follow public procurement rules. A separate Environmental Remediation Fund under PIA Section 103 already covers host community relief.

Operators must pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas and related interests directly into the Federation Account, bypassing NNPC.

The order also addresses NNPC’s conflicted role as both concessionaire and commercial operator in PSCs, which the presidency says distorts competition, and sets up a joint project team for integrated upstream–midstream operations led by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

President Tinubu emphasised the urgency for “national budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians”. His administration plans a full PIA review with stakeholders to fix what it considers fiscal flaws.

An implementation committee, chaired by the Minister of Finance and Coordinating Minister of the Economy, includes the Attorney-General, the Ministers of Budget and of State for Petroleum Resources (Oil), the Nigeria Revenue Service Chairman and others, with the Budget Office providing secretariat support.

The reforms aim to eliminate “unjustified multiple layers of deductions”, positioning NNPC as a pure commercial entity while channelling more resources to Nigeria’s core needs.