President Bola Ahmed Tinubu has issued a sweeping Executive Order directing the Nigerian National Petroleum Company Limited (NNPC Ltd.) to remit oil taxes, royalties, and profit oil directly to the appropriate government accounts.
The directive suspends the company’s collection of management fees and frontier exploration deductions, marking a significant shift in how oil and gas revenues are handled in Nigeria.
What the Executive Order Changes
According to a statement from the Federal Ministry of Finance, the new order:
- Stops NNPC from deducting management and frontier exploration fees at source.
- Mandates the direct payment of taxes, royalties, and Production Sharing Contract (PSC) profit oil into constitutionally recognised government accounts.
- Suspends the payment of gas flare penalties into the Midstream Gas Infrastructure Fund.
- Clarifies regulatory responsibilities 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 and Coordinating Minister of the Economy to oversee compliance.
Why the Move Was Taken
The Presidency said the action is aimed at aligning oil revenue administration with the 1999 Constitution, which requires all revenues from Nigeria’s mineral resources to be paid into the Federation Account.
Officials noted that fiscal structures introduced under the Petroleum Industry Act had led to substantial deductions before funds reached the Federation Account. These deductions — including 30 percent allocations for management fees and 30 percent for frontier exploration — were said to have significantly reduced government revenue inflows.
The government described the reforms as urgent, citing declining oil revenue remittances despite improved production levels and relatively favourable global oil prices. Authorities warned that continued shortfalls could undermine funding for infrastructure, healthcare, education, and other critical sectors.
Broader Fiscal Impact
The Executive Order is designed as an interim corrective measure pending legislative amendments to entrench the reforms in law. It signals tighter federal oversight of oil revenue management and may alter NNPC’s cost recovery and funding structure under the Petroleum Industry Act framework.
Government officials emphasized that Nigeria must ensure transparent, constitutionally compliant revenue flows, especially amid increasing global competition for energy investment capital.
The move is widely seen as part of broader fiscal reforms aimed at strengthening revenue integrity, improving accountability, and ensuring that oil and gas resources translate into tangible economic benefits for Nigerians.