Last week, President Bola Ahmed Tinubu signed an Executive Order designed to align oil and gas revenue flows with constitutional requirements in Nigeria. The new directive aims to improve fiscal transparency, clarify regulatory roles, and increase revenues entering the Federation from the oil and gas sector.
The order reinforces the 1999 Constitution of Nigeria, which grants ownership of mineral resources to the Federation and requires all related revenues to be paid into the Federation Account according to constitutional and statutory rules.
According to the government, certain provisions under the Petroleum Industry Act (PIA) 2021 had led to off-budget allocations and deductions from Federation revenues. The Executive Order addresses these issues by suspending collection of management fees and frontier exploration fees by the Nigerian National Petroleum Company Limited (NNPCL). It also directs that taxes, royalties, and profit oil under Production Sharing Contracts should be remitted directly by contractors to relevant fiscal authorities. Additionally, payment of gas flare penalties into the Midstream Gas Infrastructure Fund is suspended.
Further steps include clarifying responsibilities between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), which is expected to provide more certainty for operators and investors. An inter-agency implementation committee will be established, chaired by the Minister of Finance and Coordinating Minister of the Economy, to oversee execution.
The government notes that despite improved production levels and favorable market conditions, there has been a sustained decline in oil and gas revenue inflows into the Federation Account. This shortfall has limited government capacity to fund essential public services such as education, healthcare, and infrastructure.
Nigeria’s population growth has increased demand for jobs, education, healthcare access, and supporting infrastructure. At a time when global energy markets are more competitive and investment capital is selective, officials emphasize that efficient management of national resources is crucial.
“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,” reads a statement from officials. “Achieving this objective requires revenue flows that are transparent, constitutionally compliant, and fully accounted for.”
“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.”