In a major fiscal reform aimed at curbing revenue leakages, enhancing transparency, and boosting funds available to Nigeria’s federal, state, and local governments, President Bola Ahmed Tinubu has signed Executive Order 9 of 2026. The order directs that all government entitlements from oil and gas production including taxes, royalties, profit oil, and profit gas, be paid directly into the Federation Account, effective from February 13, 2026.
The directive ends several previous deductions and retention mechanisms under the Petroleum Industry Act (PIA) 2021. Key changes include:
• Suspension of the 30% management fee previously retained by the Nigerian National Petroleum Company Limited (NNPC Ltd.) on profit oil and profit gas revenues from Production Sharing Contracts (PSCs), Profit Sharing Contracts, and Risk Service Contracts.
• Transfer of the 30% profit earmarked for the Frontier Exploration Fund directly to the Federation Account, eliminating NNPC’s role in collecting and managing this fund.
• Requirement for all operators and contractors under PSCs to remit Royalty Oil, Tax Oil, Profit Oil, Profit Oil, and any other government interests straight to the Federation Account, bypassing prior deductions at source.
• Suspension of gas flare penalty payments into the Midstream and Downstream Gas Infrastructure Fund (MDGIF), with such proceeds now directed to the Federation Account.
President Tinubu described the move as essential to eliminate “excessive deductions, overlapping funds, and structural distortions” that have reduced remittances to the Federation Account. He emphasized that NNPC Ltd. will now function strictly as a commercial entity, with management fees appropriated through proper channels rather than automatic retentions.
The President has established an Implementation Committee, comprising the Minister of Finance, Attorney-General of the Federation, Minister of Budget and National Planning, Minister of State for Petroleum Resources (Oil), Chairman of the Nigeria Revenue Service, and others, to ensure coordinated rollout. A comprehensive review of the PIA is also planned to address remaining fiscal and structural issues.
The announcement, made via a State House press release and personally addressed by President Tinubu on social media, has been welcomed in many quarters as a step toward greater fiscal responsibility and constitutional compliance (anchored on Section 44(3) of the 1999 Constitution). It comes amid ongoing efforts to stabilize the economy, invest in critical sectors like security, education, and healthcare, and advance Nigeria’s energy transition.
This reform is expected to significantly increase net inflows to the Federation Account, potentially strengthening allocations during FAAC meetings and supporting national development priorities. Further details on implementation and any potential impacts on NNPC operations are awaited as the committee begins its work.
