Nigeria Moves to Reclaim 30% Oil Revenue as Tinubu Signs Executive Order on NNPC Remittances
President Bola Tinubu has signed an executive order eliminating multiple deductions from oil and gas revenue, targeting an estimated 30% of receipts currently withheld before remittance to the Federation Account.
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President Bola Tinubu signed an executive order on February 13, 2026, mandating direct remittance of oil and gas revenues to Nigeria's Federation Account, eliminating deductions that have historically reduced federal receipts by approximately 30%, according to a statement from Presidential spokesman Bayo Onanuga.
The order, anchored on Section 44(3) of the Nigerian Constitution, targets what the administration characterizes as "wasteful deductions" under the Petroleum Industry Act (PIA), which have created significant leakages in revenue flows from the Nigerian National Petroleum Company Limited (NNPC Ltd) to the federal treasury. The move comes as Nigeria grapples with fiscal pressures and seeks to maximize returns from its hydrocarbon resources.
Constitutional Basis for Revenue Restructuring
The executive order invokes constitutional provisions that vest ownership of petroleum resources in the federal government, overriding certain operational deductions that NNPC Ltd has applied before remitting revenues to the Federation Account. According to The Nation Newspaper, the directive aims to "block leakages in the oil and gas sector by eliminating multiple deductions and boost accruable revenues to the Federation Account."
Industry analysts estimate that pre-remittance deductions have reduced federal oil revenues by 25-35% in recent years, covering items ranging from operational costs to capital expenditure allocations. The Federation Account serves as the primary collection point for federally-collected revenues, which are subsequently distributed among federal, state, and local governments according to constitutional allocation formulas.
"The Executive Order is anchored on Section 44(3) of the Constitution, which vests ownership of petroleum resources in the federal government," Onanuga stated in the February 19 announcement, as reported by Vanguard News. The constitutional provision has historically been interpreted to give the federal government ultimate control over petroleum revenue management, though the PIA granted NNPC Ltd greater operational autonomy following its 2021 transformation into a commercial entity.
Domestic Gas Supply Expansion Target
Parallel to the revenue restructuring, NNPC Ltd announced plans to increase domestic gas supply by 1.8 billion cubic feet per day (bcf/d) in 2026, addressing growing demand from power generation and industrial sectors. The company disclosed the expansion target at a media briefing with the Nigeria Extractive Industries Transparency Initiative, according to Vanguard News.
The planned 1.8 bcf/d increase represents a substantial addition to Nigeria's current domestic gas supply, which has struggled to meet demand from power plants, manufacturing facilities, and the expanding compressed natural gas vehicle market. Nigeria currently produces approximately 7-8 bcf/d of gas, with roughly half allocated to domestic consumption and the remainder exported as liquefied natural gas or through the West African Gas Pipeline.
The gas supply commitment aligns with the executive order's broader objectives, as increased domestic gas utilization can generate additional revenue streams while supporting economic diversification efforts. Nigeria has prioritized gas development as part of its energy transition strategy, positioning natural gas as a bridge fuel for power generation and industrial development.
Fiscal Implications and Implementation Challenges
The revenue restructuring could significantly impact federal finances, potentially adding billions of naira monthly to Federation Account receipts. With Nigeria producing approximately 1.5 million barrels per day of crude oil and Brent crude trading above $75 per barrel in recent months, even a 10-15% increase in net remittances would translate to substantial additional revenue for all tiers of government.
However, implementation may face operational complexities. NNPC Ltd has historically used pre-remittance deductions to fund critical operations including subsidy payments, joint venture cash calls, pipeline maintenance, and strategic investments. The executive order will require the company to seek alternative funding mechanisms or direct budgetary allocations for these expenses.
According to Business Day, President Tinubu broke his silence on the "sweeping executive order" several days after signing, suggesting the administration anticipated questions about implementation mechanics and potential disruption to NNPC Ltd operations. The timing coincides with broader fiscal reforms including subsidy removal and exchange rate unification that have characterized the Tinubu administration's economic policy.
The order also raises questions about NNPC Ltd's operational independence following its 2021 commercialization under the PIA. While the company was restructured as a limited liability entity to operate on commercial principles, the executive order reasserts direct federal control over revenue flows, potentially creating tension between commercial autonomy and sovereign revenue requirements.
Market observers will monitor whether the revenue restructuring affects NNPC Ltd's credit profile and ability to secure project financing, as lenders typically assess cash flow predictability when evaluating petroleum sector investments. The company's capacity to deliver the promised 1.8 bcf/d gas supply increase may depend partly on maintaining access to capital for infrastructure development.