President Bola Tinubu has signed an Executive Order aimed at boosting oil and gas revenue for Nigeria’s Federation Account by ending excessive deductions under the Petroleum Industry Act (PIA).
ENigeria Newspaper gathered that the Executive Order, anchored in Section 44(3) of the Constitution, underscores that ownership and control of all minerals, oils, and natural gas in Nigeria, including territorial waters and the Exclusive Economic Zone, rests with the Federal Government, with revenue rights due to all three tiers of government.
According to the Presidential spokesman, Bayo Onanuga, the directive seeks to eliminate overlapping and wasteful revenue deductions, which have significantly reduced net inflows to the Federation Account since the PIA’s implementation in 2021.
The statement noted that under the current framework, NNPC Limited retains 30 per cent of Federation oil revenues as a management fee on Profit Oil and Profit Gas from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts. In addition, the company keeps 20 per cent of its profits for working capital and future investments.
“The additional 30 per cent management fee is considered unjustified by the Federal Government, as the retained earnings are already sufficient to support the functions NNPCL performs under these contracts,” the statement said.
The order also addresses NNPC’s retention of another 30 per cent of profit oil and gas under the Frontier Exploration Fund, warning that the large fund risks accumulating idle cash and encouraging inefficient exploration spending while urgent national priorities remain underfunded, including security, education, healthcare, and energy transition investments.
Other overlapping funds, such as the Midstream and Downstream Gas Infrastructure Fund (MDGIF) funded by gas flaring penalties, were cited as redundant, given that the PIA already establishes an Environmental Remediation Fund administered by the NUPRC for host community rehabilitation.
“All these deductions far exceed global norms and effectively divert more than two-thirds of potential remittances to the Federation Account,” the statement said.
“The continuing decline in net oil revenue inflows is largely attributable to these deductions and fragmented oversight under the current PIA architecture.”
The Executive Order introduces immediate measures to curb revenue leakages, enhance transparency, eliminate duplicative structures, and reposition NNPC Limited strictly as a commercial operator while protecting the Federation’s interests.
President Tinubu emphasised that the reforms are of urgent national importance, highlighting their potential to improve national budgeting, debt sustainability, economic stability, and the overall welfare of Nigerians.
The directive also identifies structural concerns with NNPC’s dual role as a concessionaire and commercial operator, which, according to Tinubu, creates competitive distortions under the current PIA framework.
By ending the 30 per cent overlapping deductions and streamlining NNPC’s role, the Executive Order is expected to restore constitutionally mandated revenue flows to federal, state, and local governments, allowing them to pursue critical national priorities efficiently.
