With executive order, Tinubu alters Nigeria’s oil law, overriding National Assembly

President Bola Tinubu has moved to rewrite key fiscal provisions of Nigeria’s landmark 2021 petroleum reform law through an executive order, setting the stage for a potential constitutional clash with the National Assembly and raising questions over the durability of oil sector contracts.

The directive — Order 9 of 2026 (Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity, 2026) — halts revenue retentions and deductions embedded in the Petroleum Industry Act (PIA), the sweeping legislation passed after nearly two decades of political wrangling to restructure the oil industry.

The PIA, signed into law by former President Muhammadu Buhari in 2021, transformed the Nigerian National Petroleum Company into NNPC Ltd., a commercially oriented entity, and created fiscal mechanisms allowing the company to retain portions of upstream earnings, including a 30% management fee on profit oil and gas and a 30% allocation for frontier exploration.

Tinubu’s order dismantles those provisions via executive action, directing that all Royalty Oil, Tax Oil, Profit Oil and Profit Gas under production sharing and related contracts be paid directly into the Federation Account.

“Effective February 13, 2026, I signed an Executive Order to restore what belongs to the Nigerian people,” Tinubu said in a national statement.

“For too long, excessive deductions, overlapping funds, and structural distortions in the oil and gas sector have weakened remittances to the Federation Account,” he added. “That must end.”

The move effectively overrides fiscal arrangements codified in an Act of Parliament — at least until the law is formally amended — and introduces uncertainty over the balance of powers between the executive and legislature in managing oil revenues, Nigeria’s primary source of foreign exchange.

The president signaled that broader legislative changes may follow.

“Our administration will also undertake a comprehensive review of the Petroleum Industry Act to address structural and fiscal anomalies that weaken national revenue,” Tinubu said.

“Constitutional Compliance”

Legal analysts say the development could spark debate over whether an executive order can suspend or neutralize financial provisions embedded in statute without prior parliamentary amendment. Section 5 of the Constitution grants executive powers to the president, but fiscal frameworks and revenue allocation structures are typically governed by legislation.

Tinubu framed the move as a constitutional correction rather than a legislative confrontation.

“Our objective is transparency, accountability, and full constitutional compliance,” he said.

The administration argues that overlapping deductions and retention mechanisms under the PIA diverted funds meant for federal, state and local governments, contributing to declining net oil inflows at a time of mounting fiscal pressure.

The order also establishes an implementation committee comprising the finance minister, attorney-general, budget minister, petroleum minister of state and other senior officials, signaling centralized executive control over the transition.

For investors and international oil companies, the episode may raise concerns about regulatory predictability in Africa’s largest oil producer.

The PIA was widely viewed as a stabilizing reform intended to provide clarity after years of uncertainty. An executive recalibration of its fiscal architecture — even if later codified through amendment — introduces a new variable into contract and revenue expectations.

Still, Tinubu cast the decision as a necessary intervention to protect public finances.

“Nigeria can no longer afford leakage where there should be leadership,” he said. “We are acting in the national interest.”