President Bola Tinubu has signed an Executive Order aimed at safeguarding and boosting oil and gas revenues accruing to the Federation Account.
The President’s Special Adviser on Information and Strategy, Bayo Onanuga, disclosed this in a statement on Wednesday, noting that the order was issued pursuant to Section 5 of the 1999 Constitution (as amended).
According to the statement, the Executive Order seeks to curb wasteful spending, eliminate duplicative structures in the petroleum sector, and redirect resources for the benefit of Nigerians.
The directive is anchored on Section 44(3) of the Constitution, which vests ownership and control of all minerals, mineral oils, and natural gas in the Government of the Federation, including resources found in territorial waters and the Exclusive Economic Zone.
The presidency said the order is designed to restore constitutional revenue entitlements of the Federal, State, and Local Governments, which it claimed were weakened 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. In addition to an existing 20 per cent retention, the Federal Government considers the additional 30 per cent management fee unjustified, arguing that retained earnings are already sufficient to fund the company’s obligations.
The statement further noted that NNPC Limited also retains another 30 per cent of oil and profit gas under certain contracts as the Frontier Exploration Fund, as provided under Sections 9(4) and (5) of the PIA. It warned that allocating such a substantial fund to speculative exploration could lead to idle cash accumulation and inefficient spending at a time when national resources are urgently needed for security, education, healthcare, and energy transition investments.
The presidency also raised concerns about the Midstream and Downstream Gas Infrastructure Fund (MDGIF) established under Section 52(7)(d) of the PIA and funded through gas flaring penalties under Section 104. It noted that Section 103 of the PIA had already created a dedicated Environmental Remediation Fund, administered by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), to rehabilitate communities impacted by upstream petroleum operations, including gas flaring.
According to the statement, the existence of overlapping funds has created duplicative structures that weaken revenue flows to the Federation Account.
The Executive Order is expected to restructure revenue remittance mechanisms in the oil and gas sector to ensure greater transparency and improved allocation of national resources.
