President Bola Ahmed Tinubu has signed a sweeping executive order stopping the Nigerian National Petroleum Company (NNPC) Limited from deducting a 30 per cent management fee from Nigeria’s oil and gas revenues. The President has directed that all such revenues be paid directly into the Federation Account with immediate effect.
The decision marks one of the most significant financial changes in Nigeria’s oil and gas sector since the passage of the Petroleum Industry Act (PIA). The Presidency says the move is aimed at blocking revenue leakages, reducing unnecessary deductions, and ensuring that more money flows directly to the federal, state, and local governments.
According to a statement released by the State House and signed by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, the reform is designed to protect national revenue, remove wasteful spending structures, and strengthen government finances at a time of economic pressure.
President Tinubu signed the Executive Order under the powers granted to him by Section 5 of the 1999 Constitution (as amended), which allows the President to exercise executive authority on behalf of the Federation.
The directive is also based on Section 44(3) of the Constitution, which states that the ownership and control of all minerals, oil, and natural gas in Nigeria belong to the Federal Government.
By invoking this constitutional provision, the President is reinforcing the position that oil revenues must first accrue fully to the Federation before any operational costs are deducted.
Under the current Petroleum Industry Act framework, NNPC Limited retains:
30 per cent of profit oil and profit gas as a management fee
20 per cent of its profits for working capital and future investments
This means NNPC effectively keeps significant portions of oil revenues before the balance is remitted to the Federation Account.
However, the Federal Government now says the additional 30 per cent management fee is unnecessary and unjustified, especially since NNPC already retains 20 per cent of its profits for operational needs.
The newly gazetted Executive Order clearly states that NNPC Limited will no longer be entitled to the 30 per cent management fee on profit oil and profit gas.
Instead, all funds due to the government — including:
Royalty Oil
Tax Oil
Profit Oil
Profit Gas
Any other revenue interest under oil and gas contracts
— must be paid directly into the Federation Account starting from February 13, 2026.
This applies to all operators and contractors under Production Sharing Contracts (PSCs), Profit Sharing Contracts, and Risk Service Contracts.
The Presidency explained that the order is meant to eliminate overlapping and redundant financial provisions within the Petroleum Industry Act framework and NNPC’s governing structure.
Officials argue that multiple deductions and layered retention mechanisms have reduced the amount of revenue reaching the Federation Account, thereby affecting national budgeting and public spending.
According to the government, removing the 30 per cent management fee will:
Increase transparency
Boost federal and state allocations
Improve budget planning
Strengthen debt management
Enhance economic stability
President Tinubu described the reform as being of “urgent national importance,” especially given its impact on public finances and the overall welfare of Nigerians.
To ensure the order is properly executed, the President has set up an implementation committee made up of key ministers and senior government officials. The committee is expected to oversee coordination between regulatory bodies, NNPC Limited, and oil operators.
In addition, the administration announced that it will carry out a broader review of the Petroleum Industry Act. This review will involve consultations with stakeholders to address what the government describes as fiscal and structural weaknesses in the current law.
The review could potentially lead to further changes in how Nigeria manages and distributes oil revenues.
Oil remains Nigeria’s main source of foreign exchange and a major contributor to government revenue. Any change in how oil income is managed directly affects federal, state, and local government finances.
If effectively implemented, the new order could increase funds available for infrastructure, salaries, social services, and debt repayment.
However, analysts note that the real impact will depend on:
Transparent enforcement
Proper monitoring of remittances
Clear reporting from NNPC and oil operators
The development signals a stronger federal push to centralise oil revenues and tighten financial controls in the sector.
As the implementation begins, stakeholders across the oil industry and government will be watching closely to see how the changes affect revenue flows and economic stability in the months ahead.
