President Bola Tinubu has signed a new executive order mandating the direct remittance of oil and gas revenues to the Federation Account Allocation Committee (FAAC), in a move aimed at boosting government earnings and improving transparency in the sector.
The development was announced on Wednesday by the President’s spokesperson, Bayo Onanuga, who said the directive is designed to “safeguard and enhance oil and gas revenues for the federation, curb wasteful spending, and eliminate duplicative structures in the oil and gas sector.”
End to NNPC Deductions
Under the executive order, the Nigerian National Petroleum Company (NNPC) Limited will no longer retain certain portions of oil revenues previously deducted under existing arrangements.
Onanuga stated:
“NNPC Limited will ensure that the 30% profit from oil and gas from production sharing, profit sharing, and risk service contracts currently earmarked for the frontier exploration fund is henceforth transferred to the Federation Account.”
He added that the company will also no longer receive the 30 percent management fee on profit oil and gas revenues, noting that such funds should accrue fully to the federation.
In addition, operators and contractors under production sharing contracts are now required to remit all government entitlements—including royalty oil, tax oil, profit oil, and profit gas—directly to the Federation Account from the effective date of the order, February 13, 2026.
Gas Flare Penalties Redirected
The directive also affects gas flare penalties. According to Onanuga, proceeds from penalties imposed on companies for gas flaring will now be paid into the Federation Account instead of the Midstream and Downstream Gas Infrastructure Fund (MDGIF).
Restoring Revenue to Three Tiers of Government
The presidency said the order is intended to restore the constitutional revenue entitlements of the federal, state, and local governments, which were affected by deductions introduced under the Petroleum Industry Act (PIA).
Onanuga noted that existing arrangements allowed significant revenue losses through “deductions, sundry charges, and fees,” adding that multiple layers of retention had diverted a large portion of funds meant for the federation.
The executive order seeks to eliminate what the government described as unjustified deductions, enhance transparency, and reposition NNPC Limited to operate strictly as a commercial entity.
Implementation Structure
To ensure effective execution, the President approved the establishment of an implementation committee comprising key officials, including the ministers of finance, justice, budget and planning, and state for petroleum resources, among others.
The presidency said the reforms are critical to improving national revenue, strengthening fiscal stability, and supporting government priorities across all tiers.
