President Bola Tinubu has signed a new Executive Order suspending the collection of management and frontier exploration fees by the Nigerian National Petroleum Company Limited (NNPCL) and directing the full remittance of oil and gas revenues to the Federation Account.
The directive, disclosed by the Federal Ministry of Finance, is aimed at plugging revenue leakages and restoring constitutionally compliant revenue flows amid declining inflows to the Federation Account.
According to the ministry, the Executive Order:
- Suspends NNPCL’s collection of management and frontier exploration fees
- Mandates direct remittance of taxes, royalties, and profit oil under Production Sharing Contracts
- Halts payment of gas flare penalties into the Midstream Gas Infrastructure Fund
- Clarifies regulatory roles between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)
- Establishes an inter-agency implementation committee chaired by the Minister of Finance
The order takes immediate effect and is described as an interim corrective step pending legislative amendments.
The Finance Ministry said the action became “necessary and urgent” due to sustained declines in oil and gas revenue inflows into the Federation Account, despite improved production levels and favourable global market conditions.
The move reinforces provisions of the 1999 Constitution, which vests ownership of mineral resources in the Federation and mandates that revenues be paid into the Federation Account for appropriation.
Officials say the shortfall in remittances has constrained government spending on education, healthcare, infrastructure, and other budget priorities.
The Executive Order also addresses fiscal structures introduced under the Petroleum Industry Act, which commercialised NNPC into a limited liability company and restructured revenue-sharing arrangements.
According to the ministry, some of those arrangements resulted in off-budget deductions from Federation revenues.
The new directive signals tighter oversight of oil revenue administration and could affect NNPCL’s cost recovery mechanisms and funding structure.
Despite revenue concerns, NNPCL reported strong financial results in 2025:
- N14.706 trillion remitted in statutory payments (January–December 2025)
- N60.5 trillion total revenue for the year
- N5.76 trillion profit after tax
In May 2025, President Tinubu also signed the Upstream Petroleum Operations Cost Efficiency Incentives Order, introducing performance-based tax incentives for upstream operators achieving benchmark cost savings.
The latest Executive Order underscores the administration’s push for greater fiscal transparency and stricter compliance within the oil and gas sector, long Nigeria’s largest source of public revenue.
Analysts say the effectiveness of the directive will depend on enforcement consistency and whether proposed legislative amendments are passed to entrench the reforms permanently.
