President Bola Tinubu has signed a sweeping executive order aimed at redirecting oil and gas revenues straight into the Federation Account Allocation Committee (FAAC), marking one of the most significant fiscal shifts since the passage of the Petroleum Industry Act.
The directive, announced by presidential spokesperson Bayo Onanuga, mandates the direct remittance of royalty oil, tax oil, profit oil and profit gas to the Federation Account. It also strips NNPC Limited of its controversial 30 per cent management fee on profit oil and profit gas revenues.
Under the new order, NNPC will no longer manage the 30 per cent Frontier Exploration Fund carved out under the PIA. Instead, those funds will flow directly into the federation account for distribution to federal, state and local governments.
The presidency said the move is designed to “restore constitutional entitlements” to the three tiers of government, arguing that current PIA provisions allow excessive deductions that significantly erode national revenue.
Gas Flare Penalties Redirected
Tinubu also suspended payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund. Going forward, proceeds from gas flaring penalties will be paid directly into the Federation Account.
Officials argue that existing legal frameworks already provide for environmental remediation funds, making the additional structure duplicative.
Tackling Revenue Leakages
The executive order addresses what the presidency describes as overlapping deductions, including a 30 per cent management fee and separate profit retentions which collectively divert over two-thirds of potential remittances.
Tinubu warned that declining net oil revenues threaten national budgeting, debt sustainability and economic stability. He said the reforms will reposition NNPC strictly as a commercial entity while enhancing transparency and accountability.
Implementation Committee Set Up
An implementation committee has been constituted, comprising key economic and justice officials, to ensure coordinated execution of the order.
The president also announced plans for a broader review of the Petroleum Industry Act (PIA) to address structural and fiscal concerns raised by stakeholders.
With oil revenue central to Nigeria’s fiscal health, the executive order signals a decisive attempt to tighten revenue flows and strengthen FAAC allocations nationwide.
