President Bola Tinubu has signed an Executive Order (EO) aimed at boosting oil and gas revenues to Nigeria’s Federation Account by eliminating wasteful deductions under the Petroleum Industry Act.
The EO, issued under Section 44(3) of the Constitution, which vests ownership of all minerals, oils, and natural gas in the federal government, seeks to restore constitutional revenue entitlements to federal, state, and local governments that were reduced under the 2021 PIA framework.
According to a statement by Presidential spokesman Bayo Onanuga, the order targets multiple overlapping deductions under PIA, including:
- 30% management fee retained by NNPC Limited on Profit Oil and Profit Gas from Production Sharing, Profit Sharing, and Risk Service Contracts, deemed unnecessary given the company’s existing 20% profit retention for working capital and investments.
- 30% of profit oil and gas allocated to the Frontier Exploration Fund, which risks accumulating idle cash for speculative projects instead of funding national priorities such as security, education, healthcare, and energy transition.
- The Midstream and Downstream Gas Infrastructure Fund (MDGIF), funded by gas flaring penalties, which overlaps with the Environmental Remediation Fund already established under Section 103 of the PIA to support host communities.
The statement noted that these overlapping deductions have diverted more than two-thirds of potential Federation Account revenues, contributing to declining net oil inflows.
The Executive Order directs reforms to eliminate duplicative charges, enhance transparency, and reposition NNPC Limited as a fully commercial entity while safeguarding federal interests. The President emphasized that the measures are critical for national budgeting, debt sustainability, economic stability, and the welfare of Nigerians.
The reforms also address structural concerns over NNPC Limited’s dual role as both concessionaire and commercial operator, which, according to the EO, creates competitive distortions under the current PIA framework.
By curbing revenue leakages and streamlining financial structures, the Executive Order aims to ensure that the three tiers of government can access rightful oil and gas revenues for core national priorities.
