Nigeria's Tinubu Orders Direct Oil Revenue Remittance, Ending NNPC Collection Role
President Bola Tinubu has signed an executive order requiring direct remittance of oil revenues to the Federation Account, removing NNPC's authority to collect and manage a 30% exploration fund while suspending gas flare penalties.
Syntheda's AI wire-service correspondent delivering fast-turnaround breaking news across all beats and all African countries. Writes in neutral, factual wire-service style prioritizing speed, accuracy, and multi-source attribution.
President Bola Tinubu has signed an executive order mandating direct remittance of oil revenues to Nigeria's Federation Account, fundamentally altering the country's petroleum revenue management system. The directive removes the Nigerian National Petroleum Company's (NNPC) authority to collect and manage the 30% exploration fund, according to This Day.
The executive order establishes an implementation committee to oversee execution of the new revenue framework. The federal government will undertake a comprehensive review of the Petroleum Industry Act (PIA), the legislation governing Nigeria's oil and gas sector since 2021.
The order also suspends payment of gas flare penalties to the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Gas flaring, the burning of natural gas associated with crude oil extraction, has been a persistent environmental and economic concern in Nigeria's oil-producing regions.
Content Levy Enforcement Continues
Separately, the Nigerian Content Development and Monitoring Board (NCDMB) has intensified enforcement of the 1% Nigerian content levy on oil and gas operators despite industry resistance. The agency reminded operators, contractors, and service companies in the upstream sector that access to regulatory approvals and services depends on payment certificates, This Day reported.
The Nigerian content levy, mandated under the Nigerian Oil and Gas Industry Content Development Act, requires companies operating in the petroleum sector to remit 1% of contract values to support local content development. The NCDMB's enforcement comes as operators face mounting pressure from multiple revenue obligations.
The dual developments signal a broader push to tighten revenue collection and regulatory compliance in Nigeria's oil sector. The country, Africa's largest crude producer, has struggled with revenue leakage and transparency issues in petroleum revenue management for decades.
Industry Response and Implementation
The removal of NNPC's collection authority represents a significant shift in the state oil company's role. NNPC has historically managed substantial revenue streams, including the exploration fund intended to finance upstream petroleum activities. The new arrangement aims to improve transparency by channeling revenues directly to the Federation Account, which distributes funds among federal, state, and local governments.
The implementation committee will face the challenge of establishing new collection mechanisms while maintaining operational funding for critical exploration activities. Industry observers note that the success of the reform depends on creating efficient alternative funding structures for petroleum sector development.
The PIA review announced alongside the executive order suggests the government may seek legislative amendments to align the law with the new revenue management framework. The PIA, enacted after nearly two decades of legislative delays, was designed to modernize Nigeria's petroleum sector governance and attract investment.
Broader Revenue Context
Nigeria's petroleum sector generates approximately 90% of foreign exchange earnings and contributes significantly to government revenue, making effective revenue management critical to fiscal stability. The country has faced declining oil production in recent years due to theft, pipeline vandalism, and underinvestment, dropping from over 2 million barrels per day to levels below OPEC quotas.
The NCDMB's insistence on levy compliance occurs as the agency works to increase Nigerian participation in oil and gas value chains. The board has set targets for local content in various petroleum sector activities, requiring companies to demonstrate compliance before receiving operational approvals.
The executive order's timing coincides with renewed efforts to boost petroleum production and revenue. The suspension of gas flare penalties to MDGIF may provide temporary relief to operators while the government restructures the revenue framework, though environmental advocates have long criticized such penalties as insufficient deterrents.
The implementation committee's work will determine whether the new system achieves greater transparency and efficiency in oil revenue management. Success could serve as a model for broader fiscal reforms in Nigeria's resource-dependent economy, while failure risks further complicating an already complex regulatory environment for petroleum operators.