President Bola Ahmed Tinubu has signed a new Executive Order aimed at safeguarding and enhancing oil and gas revenues accruing to the Federation Account.
The directive, according to a statement issued on Wednesday by the President’s Special Adviser on Information and Strategy, Bayo Onanuga, seeks to curb revenue leakages, eliminate duplicative funding structures in the petroleum sector and redirect resources to priority national needs.
Onanuga said the Executive Order was issued pursuant to Section 5 of the 1999 Constitution (as amended), which empowers the President to execute and maintain the Constitution. It is also anchored on Section 44(3), which vests ownership and control of all minerals, mineral oils and natural gas in the Federal Government.
The statement explained that the Order is designed to restore the constitutional revenue entitlements of the Federal, State and Local Governments, which it said were significantly altered by provisions of the Petroleum Industry Act (PIA) enacted in 2021.
Under the current PIA framework, NNPC Limited retains 30 per cent of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts and Risk Service Contracts. The Federal Government considers this additional 30 per cent retention, alongside an existing 20 per cent retention, as excessive.
The statement further noted that NNPC Limited also retains another 30 per cent of its oil and profit gas under the same contracts for the Frontier Exploration Fund, as provided under Sections 9(4) and (5) of the PIA. The government argued that allocating such a large fund to exploration activities risks creating idle cash balances and inefficient spending at a time when resources are urgently needed for security, healthcare, education and energy transition projects.
Concerns were also raised about the Midstream and Downstream Gas Infrastructure Fund (MDGIF), funded through gas flaring penalties under Section 104 of the PIA. According to the statement, the Act already established an Environmental Remediation Fund under Section 103, administered by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), to address environmental damage in host communities.
The Executive Order, the presidency said, is intended to streamline these structures, block revenue losses and ensure that oil and gas proceeds are fully remitted to the Federation Account for equitable distribution among the three tiers of government.