President Bola Ahmed Tinubu has approved a new Executive Order aimed at protecting and boosting oil and gas earnings due to the Federation Account. The directive also targets waste reduction, removal of overlapping structures in the sector, and improved allocation of national resources for public benefit.
The development was made public in a statement released on Wednesday by the President’s Special Adviser on Information and Strategy, Bayo Onanuga. He explained that the order was issued in line with Section 5 of the Constitution of the Federal Republic of Nigeria (as amended).
The Executive Order is rooted in Section 44(3) of the Constitution. The provision places ownership, control, and derivative rights over all minerals, crude oil, and natural gas found within Nigeria’s land territory, territorial waters, and Exclusive Economic Zone in the hands of the Federal Government.
According to the statement, the new directive is designed to reinstate the constitutionally backed revenue shares of the Federal, State, and Local Governments. These entitlements were affected by provisions introduced under the Petroleum Industry Act (PIA) in 2021.
The statement explained that the PIA established legal and structural frameworks that allow significant deductions from Federation revenue through various charges, fees, and other financial retentions.
Under the existing arrangement, NNPC Limited keeps 30 percent of the Federation’s oil income as a management fee. This applies to Profit Oil and Profit Gas generated through Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts.
Government officials consider the retention excessive. The statement noted that the company already holds 20 percent earnings. Authorities believe this existing share is adequate for operational responsibilities tied to such contracts.
The statement further said:
“NNPC Limited also retains another 30% of its oil and profit gas under the production sharing, profit sharing, and risk service contracts, as the Frontier Exploration Fund under sections 9(4) and (5) of the PIA. A fund of this size, being devoted to speculative exploration, risks accumulating large idle cash balances, which would encourage inefficient exploration spending, at a time when government resources are urgently needed for core national priorities, including security, education, healthcare, and energy transition investments.
“There is also the Midstream and Downstream Gas Infrastructure Fund (MDGIF) under Section 52(7)(d) PIA, funded by the collection of gas flaring penalties provided under Section 104. The fund is to be used for supporting environmental remediation and relief for host communities impacted by gas flaring.
“However, section 103 of the PIA has already established a dedicated Environmental Remediation Fund, administered by NUPRC, specifically designed to fund the rehabilitation of communities negatively impacted by upstream petroleum operations, including gas flaring. Furthermore, Section 103 already imposes a fee on lessees to contribute to this fund for precisely this purpose,” the statement read in part.
The Federal Government believes the Executive Order will block revenue leakages. It is also expected to improve statutory remittances and ensure that oil and gas proceeds are distributed in accordance with constitutional provisions.
