KEY POINTS
- The president ordered oil and gas revenues to be paid directly into the Federation Account to improve transparency and national income.
- NNPC’s 30% management fee and 30% frontier exploration deductions have been scrapped.
- Gas-flare penalties will now go straight to government coffers, while the Petroleum Industry Act will undergo review.
President Bola Tinubu has signed a new executive order directing that proceeds from Nigeria’s oil and gas operations be paid directly into the Federation Account, in a sweeping reform aimed at boosting national revenue, blocking financial leakages, and eliminating overlapping structures in the petroleum sector.
According to a statement from his media adviser, the directive is grounded in constitutional provisions that grant the federal government ownership and control of all mineral resources, including crude oil and natural gas.
The government argued that these deductions combined with the company’s existing 20% profit retention for operational costsexceeded global standards and diverted more than two-thirds of potential public revenue.
Gas Flare Penalty Payments Redirected
Payments of gas-flaring penalties into the Midstream and Downstream Gas Infrastructure Fund have been suspended. Instead, proceeds will now go directly to the Federation Account.
The administration noted that environmental remediation for affected communities is already covered under an existing fund managed by the Nigerian Upstream Petroleum Regulatory Commission, making the additional channel redundant.
The government said the order addresses structural flaws created under the Petroleum Industry Act, which it claims introduced legal and financial mechanisms that reduced distributable national revenue through multiple deductions and fees.
Tinubu also announced a comprehensive review of the law in consultation with stakeholders to correct fiscal and operational anomalies.
A multi-agency committee has been established to oversee execution of the reforms and coordinate integrated petroleum operations. Members include top officials from the finance ministry, justice ministry, budget office, revenue service, and presidential energy advisory team.
