Tinubu Strips NNPCL of Revenue Deduction Powers in Sweeping Executive Order
How Tinubu’s New Executive Order Impacts NNPCL and FAAC
President Bola Ahmed Tinubu has signed a landmark executive order aimed at realigning Nigeria’s oil and gas revenue flows. The directive, titled Executive Order 9 of 2026, strips the Nigerian National Petroleum Company Limited (NNPCL) of its long-standing power to deduct management fees and other charges at source before remitting funds to the federation.
The order, which was officially gazetted on February 13, 2026, and announced by the Presidency on Wednesday, February 18, seeks to restore constitutional revenue entitlements to the federal, state, and local governments. According to the Presidency, these entitlements were inadvertently undermined by certain provisions of the Petroleum Industry Act (PIA) 2021.
Suspension of Multi-Billion Naira Fees
Under the new fiscal framework, NNPCL is prohibited from retaining two major categories of revenue that previously bypassed the Federation Account Allocation Committee (FAAC):
Management Fees (30%): NNPCL will no longer be entitled to a 30% management fee on profit oil and profit gas derived from Production Sharing Contracts (PSCs). The Federal Government argued this was "unjustified" as the company already retains a 20% profit margin for its operational needs.
Frontier Exploration Fund (30%): The 30% of profit oil earmarked for "speculative" exploration in frontier basins will now be remitted directly to the Federation Account.
The move is expected to inject over ₦1.42 trillion into the Federation Account in 2026 alone, providing critical liquidity for national priorities such as security, education, and healthcare.
Direct Remittance and Transparency
A core component of the Executive Order is the mandate for all oil and gas operators and contractors to bypass NNPCL as a middleman. Effective immediately, all Royalty Oil, Tax Oil, Profit Oil, and Profit Gas must be paid directly to the appropriate fiscal authorities for remittance into the Federation Account.
"The fundamental purpose of the national oil company is to convert hydrocarbon resources into sustainable revenues that benefit the broader economy," a statement from the Presidency noted. "Achieving this requires revenue flows that are transparent, constitutionally compliant, and fully accounted for."
Additionally, the President has suspended the payment of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). These proceeds will now flow into the Federation Account, with any future expenditures from the MDGIF subject to strict public procurement laws.
Implementation and Structural Reform
To ensure the coordinated execution of these reforms, President Tinubu has approved an Implementation Committee chaired by the Minister of Finance and Coordinating Minister of the Economy. The committee includes:
The Attorney-General of the Federation.
The Minister of Budget and National Planning.
The Minister of State for Petroleum Resources (Oil).
The Chairman of the Federal Inland Revenue Service (FIRS).
The order also signals a deeper shift in NNPCL's identity. By removing its role as a "concessionaire" that influences operating costs, the government intends to reposition NNPCL strictly as a commercial entity, as originally envisioned by the PIA.
Executive Order 9 of 2026 represents one of the most significant interventions in Nigeria’s petroleum fiscal system since the passage of the PIA. By halting off-budget deductions and centralizing revenue collection, the Tinubu administration aims to curb leakages and bolster debt sustainability. While this serves as an interim corrective measure, the Presidency has indicated that a comprehensive legislative review of the PIA will follow to permanently entrench these fiscal reforms.
