Tinubu strips NNPC of billions in retained oil revenue, orders direct remittance to federation account

President Bola Tinubu has ordered a sweeping overhaul of Nigeria’s oil revenue architecture, stripping the state oil company of key retention rights under the Petroleum Industry Act and directing that all government entitlements from oil and gas contracts be paid directly into the Federation Account.

The move, formalised under Order 9 of 2026 (Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity, 2026), effectively ends the 30% management fee on profit oil and profit gas and halts the 30% deduction for the Frontier Exploration Fund — two provisions that allowed NNPC Ltd. to retain a substantial share of upstream earnings.

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

“For too long, excessive deductions, overlapping funds, and structural distortions in the oil and gas sector have weakened remittances to the Federation Account. When revenues meant for federal, state, and local governments are trapped in layers of charges and retention mechanisms, development suffers. That must end.”

Direct Remittances

Under the new directive, all Royalty Oil, Tax Oil, Profit Oil, Profit Gas and other government entitlements under production sharing and related contracts must now be paid directly into the Federation Account. The order also bars NNPC from collecting the additional 30% management fee and from retaining the 30% frontier exploration allocation.

“The additional 30 per cent management fee and the 30 per cent Frontier Exploration deduction will no longer stand in the way of national revenue,” Tinubu said.

The decision marks one of the most consequential shifts in oil governance since the Petroleum Industry Act (PIA) was enacted in 2021.

Under the PIA framework, NNPC Ltd. — restructured into a limited liability company — retained 20% of profits for working capital and future investment, in addition to the 30% management fee on profit oil and profit gas from production sharing, profit sharing and risk service contracts.

Tinubu’s order effectively dismantles those additional retention layers, arguing they created “duplicative deductions and fragmented oversight.”

“Our objective is transparency, accountability, and full constitutional compliance,” the president said. “Oil and gas revenues must serve the Nigerian people first and this reform is about fairness and fiscal responsibility.”

The overhaul redefines NNPC’s role in the sector. “NNPC Limited will operate strictly as a commercial enterprise, as intended under law. The era of duplicative deductions and fragmented oversight is over,” Tinubu said.

The directive comes as Nigeria grapples with persistent fiscal strain, weak oil production growth and mounting debt service obligations. By redirecting retained oil revenues into the Federation Account — which funds federal, state and local government allocations — the administration is seeking to boost distributable revenues and shore up public finances.

“As we strengthen national security, invest in education, expand healthcare, stabilise the economy, and advance our energy transition, every legitimate naira due to the Federation must be protected,” Tinubu said.

The president also announced a comprehensive review of the Petroleum Industry Act and the formation of an implementation committee to oversee execution of the order, signalling that further structural changes to Nigeria’s oil governance framework may follow.

“We are safeguarding the Federation Account. We are strengthening our budget. We are acting in the national interest,” Tinubu said.