Tinubu’s Executive Order to Boost FG, State, and LG Revenues by N15tn: Direct Oil and Gas Remittances

President Bola Tinubu’s latest Executive Order is set to transform Nigeria’s oil and gas revenue system, with federal, state, and local governments potentially gaining an additional N14.57tn. The order mandates that royalties, profit oil, profit gas, and other revenues from production sharing, profit sharing, and risk service contracts be paid directly into the Federation Account, bypassing previous retention structures. Analysts say this could mark one of the most significant fiscal interventions in recent Nigerian history.

Previously, the Nigerian National Petroleum Company (NNPC) retained up to 60% of Production Sharing Contract proceeds through the Frontier Exploration Fund and management fees. Under the new directive, these deductions are abolished, redirecting billions in oil royalties, gas flaring penalties, and petroleum taxes directly to the Federation Account. Revenue projections from 2025 indicate the NNPC could forgo approximately N906.91bn in management and exploration fees, while the Nigerian Upstream Petroleum Regulatory Commission could lose N7.55tn in royalty collections.

President Tinubu emphasized that excessive deductions and overlapping funds had historically weakened remittances to the Federation Account, slowing national development. Speaking on X, he said the reform ensures oil and gas revenues “serve the Nigerian people first,” aligning with his “Nigeria First” agenda. The order also requires all operators and contractors under Production Sharing Contracts to remit funds directly, and places Midstream and Downstream Gas Infrastructure Fund expenditures under standard public procurement rules.

Experts have largely welcomed the reform, but caution that careful sequencing is necessary to maintain investor confidence. Professor Wumi Iledare of the Oil, Gas, and Energy Policy Forum described the move as a “significant fiscal intervention” but noted potential overlaps with the Petroleum Industry Act 2021. The Capital Market Academics of Nigeria also praised the order as “bold and historic,” noting it restores fairness in revenue distribution across all tiers of government.

The reallocation of billions in oil and gas revenues is expected to boost sub-national government budgets, reduce fiscal deficits, and enable more consistent funding for infrastructure, healthcare, and education. As Nigeria enters a new phase of fiscal transparency, stakeholders are watching closely to ensure that these reforms are implemented efficiently, balancing revenue growth with long-term sector stability.

source: punch