By Bassey Udo
President Bola Tinubu has issued an Executive Order barring the Nigerian National Petroleum Company (NNPC) Limited from withholding, deducting oil, gas revenues meant to be paid into the Federation Account.
The Executive Order also bars the NNPC Ltd from further collecting management fees and frontier exploration fees in its operations.
The Federal Ministry of Finance authorities said the Executive Order was aimed at realigning oil and gas revenue flows with constitutional requirements, and providing safeguards to the Federation oil and gas revenues as well as enhance sector regulatory clarity.
Details of the Order showed it also seeks to strengthen fiscal transparency, clarify regulatory mandates, and enhance revenues accruing to the Federation from the oil and gas sector.
The Executive Order reinforces the provisions of the 1999 Constitution of the Federal Republic of Nigeria, which vest ownership of mineral resources in the Federation and require that all revenues derived from those resources be paid directly into the Federation Account for appropriation in accordance with established constitutional and statutory rules.
In recent years, the NNPC Ltd. was in the habit of deducting from source all operational expenses from revenues realised oil and gas exports as well as other operation before remitting whatever was left to the Federation Account for distribution among the three tiers of the government.
In line with the established statutory constitutional principles, the Order addresses certain fiscal and structural arrangements introduced under the Petroleum Industry Act (PIA) 2021 that resulted in off-budget allocations and deductions from Federation revenues by the NNPC Ltd.
Apart from the suspension of the collection of management fees and frontier exploration fees, the Executive Order also specifically directs that taxes, royalties, and profit oil under Production Sharing Contracts (PSCs) be remitted directly by contractors to the appropriate fiscal authorities.
In addition, Order suspends the payment of gas flare penalties into the Midstream Gas Infrastructure Fund, while clarifying the delineation of responsibilities between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), providing greater regulatory certainty for operators and investors.
Besides, the Order establishes an inter-agency implementation committee, chaired by the Minister of Finance and Coordinating Minister of the Economy, to ensure coordinated and seamless execution.
The Presidency said the Order became both necessary and urgent considering the sustained decline in oil and gas revenue inflows into the Federation Account, despite improvements in production levels and favourable market conditions.
It noted that the shortfall has constrained the government’s capacity to meet budgetary obligations and to finance critical public investments in education, healthcare, and infrastructure.
“These challenges are unfolding at a time when Nigeria’s rapidly growing and youthful population is generating increased demand for jobs, quality education, accessible healthcare, and infrastructure that supports inclusive economic opportunity,” the Presidency noted.
At the same time, it said global energy markets were becoming more competitive and capital increasingly selective.
In such an environment, the Presidency said Nigeria cannot afford inefficiencies in the management of its most strategic economic asset.
“The fundamental purpose of the nation’s oil and gas sector, including the national oil company, is to convert hydrocarbon resources into sustainable revenues,
investment, and economic activity that benefit the broader economy. Achieving this objective requires revenue flows that are transparent, constitutionally compliant, and fully accounted for,” a statement from the Ministry said.
“This Executive Order takes immediate effect and serves as an interim corrective measure pending legislative amendments to entrench these reforms in statute.
Collectively, these measures represent another significant step toward strengthening fiscal discipline, safeguarding revenue integrity, and ensuring that Nigeria’s natural resources deliver tangible value to citizens, investors, and the economy,” the Ministry added.
