President Bola Tinubu has issued an Executive Order directing direct remittance of oil and gas revenues to the Federation Account.
The order is to safeguard and enhance revenues, curb wasteful spending and eliminate duplicative structures in the sector.
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This is contained in a statement issued by Presidential Spokesperson, Mr Bayo Onanuga, on Wednesday in Abuja.
The President signed the order pursuant to Section 5 of the Constitution of the Federal Republic of Nigeria (as amended).
It is anchored on Section 44(3) of the Constitution, which vests ownership and control of mineral resources in the Federal Government.
Tinubu said the directive sought to restore constitutional revenue entitlements of the three tiers of government removed in 2021 by the Petroleum Industry Act (PIA).
He said the PIA created structural and legal channels through which substantial Federation revenues were lost through deductions, charges and fees.
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.
He said the company also retained 20 per cent of its profits to cover working capital and future investments.
Tinubu said the additional 30 per cent management fee was unjustified, given the existing 20 per cent retention.
He said NNPC Ltd. also retained another 30 per cent of its profit oil and profit gas as the Frontier Exploration Fund under sections 9(4) and (5) of the PIA.
Tinubu said the fund risked accumulating idle cash balances and encouraging inefficient exploration spending.
He said the order also addressed the Midstream and Downstream Gas Infrastructure Fund (MDGIF) created under Section 52(7)(d) of the PIA.
The MDGIF is funded by gas flaring penalties, even though the PIA already established an Environmental Remediation Fund under Section 103.
He said the overlapping funds and deductions far exceeded global norms and effectively divert more than two-thirds of potential remittances.
Tinubu said the Executive Order would resolve duplicative deductions by addressing overlapping provisions across relevant laws and regulatory instruments.
According to him, the objective is to eliminate multiple layers of deductions that erode revenues meant for the Federation Account.
The President also raised concerns over the continued role of NNPC Limited as a concessionaire under Production Sharing Contract arrangements.
He said the framework created competitive distortions and undermines NNPC Ltd.’s transition into a fully commercial operator.
Tinubu said the order introduced immediate measures to curb leakages, enhance transparency and reposition NNPC Ltd. strictly as a commercial enterprise.
He said the reforms were urgent given their implications for national budgeting, debt sustainability and economic stability.
Tinubu said his administration would also undertake a comprehensive review of the PIA in consultation with stakeholders.
According to the order, NNPC Ltd. will no longer collect and manage the 30 per cent Frontier Exploration Fund.
It said the 30 per cent profit oil and gas currently earmarked for the fund must henceforth be transferred to the Federation Account.
The order also states that NNPC Limited will no longer be entitled to the 30 per cent management fee on profit oil and profit gas revenues.
All operators and contractors under production sharing contracts must, from Feb. 13, pay royalty oil, tax oil, profit oil, profit gas and other interests directly to the Federation Account.
Tinubu, however, suspended payments of gas flare penalties into the MDGIF.
Proceeds from all penalties imposed on operators for gas flaring must be paid into the Federation Account.