Tinubu Ends NNPCL Oil Revenue Deductions, Orders Full FAAC Remittance

Tinubu Ends NNPCL Oil Revenue Deductions, Orders Full FAAC Remittance

President Bola Ahmed Tinubu has signed a sweeping executive order mandating the direct remittance of all oil and gas revenues into the Federation Account Allocation Committee (Federation Account Allocation Committee), in what is regarded as one of the most significant fiscal reforms since the enactment of the Petroleum Industry Act (PIA).

The directive, announced by presidential spokesperson Bayo Onanuga, requires that all proceeds from royalty oil, tax oil, profit oil, and profit gas be paid in full into the federation account without deductions, before statutory distribution to the federal, state, and local governments.

A central element of the order strips Nigerian National Petroleum Company Limited (NNPCL) of its long-standing 30 per cent management fee on profit oil and profit gas, a deduction that has repeatedly drawn criticism for significantly reducing funds available for sharing among the three tiers of government. The presidency said the practice undermined constitutional revenue entitlements and weakened public finances.

In addition, the president directed that the 30 per cent Frontier Exploration Fund created under the PIA will no longer be retained or managed by NNPCL. Instead, all funds previously set aside under the arrangement will now flow directly into the federation account for FAAC distribution, altering the financing structure for frontier basin exploration activities.

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The executive order also affects the handling of gas flare penalties. Payments into the Midstream and Downstream Gas Infrastructure Fund have been suspended, with all proceeds from gas flaring penalties now to be paid directly into the federation account. Officials said existing environmental remediation frameworks already cover such obligations, making the additional fund unnecessary.

According to the presidency, the reforms are aimed at blocking overlapping deductions, including management fees and profit retentions, which collectively divert more than two-thirds of potential oil and gas revenues before they reach FAAC. President Tinubu warned that shrinking net oil revenues pose serious risks to national budgeting, debt sustainability, and overall economic stability.

The president emphasised that the new framework will reposition NNPCL strictly as a commercially driven national oil company, removing quasi-fiscal responsibilities while strengthening transparency, accountability, and oversight in Nigeria’s oil and gas revenue management.

To ensure effective implementation, Tinubu approved the establishment of an inter-ministerial committee comprising senior officials from the economic management team, justice sector, and relevant regulatory agencies. The committee is expected to coordinate legal, financial, and operational steps required for immediate compliance.

The president also signalled plans for a broader review of the Petroleum Industry Act, indicating that further amendments may be pursued to address structural and fiscal concerns raised by stakeholders, particularly state governments.

With oil and gas revenues remaining central to Nigeria’s fiscal health, the executive order represents a decisive move to tighten revenue flows, strengthen FAAC allocations, and reinforce fiscal federalism across the country.

Tinubu Ends NNPCL Oil Revenue Deductions, Orders Full FAAC Remittance