Economy
Tinubu Signs Executive Order to Stop NNPC 30% Management Fee
By Adedapo Adesanya
President Bola Tinubu has signed an Executive Order directing all oil and gas revenues be remitted directly to the Federation Account, effectively halting the 30 per cent management fee previously retained by Nigerian National Petroleum Company (NNPC) Limited under the Petroleum Industry Act (PIA) 2021.
The order, signed on February 13, 2026, and gazetted the same day, mandates the direct transfer of revenues from production sharing contracts and other upstream arrangements to the Federation Account.
The presidency said the move is aimed at restoring full constitutional revenue entitlements to federal, state and local governments by eliminating deductions and retentions it described as excessive and duplicative.
Under the new directive, NNPC Limited will no longer retain the 30 per cent management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts and Risk Service Contracts. The government maintained that the existing 20 per cent profit retention allowed for working capital and investments is sufficient to meet the company’s operational requirements.
The Executive Order also abolishes the 30 per cent retention for the Frontier Exploration Fund as provided under Sections 9(4) and (5) of the PIA.
This means that all funds earmarked for frontier exploration are now to be transferred directly into the Federation Account, a move the Presidency said would prevent the build-up of idle balances for speculative projects.
In addition, operators and contractors under production sharing arrangements are required to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas and all other government entitlements straight to the Federation Account with effect from February 13, 2026.
The order further suspends the payment of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund. Going forward, such penalties will be paid into the Federation Account, while existing expenditures from the fund must comply strictly with public procurement laws.
According to the presidency, the existing PIA framework has enabled deductions that exceed global norms and divert more than two-thirds of potential oil and gas revenues away from the Federation Account. It attributed declining net oil revenue inflows to these structures and what it described as fragmented oversight mechanisms.
President Tinubu also raised concerns over NNPC Limited’s dual role as concessionaire and commercial operator under production sharing contracts, noting that the arrangement creates competitive distortions and undermines the company’s transition to a fully commercial entity as envisaged under the PIA.
To drive implementation, the President approved the constitution of a joint project team, with the Nigerian Upstream Petroleum Regulatory Commission serving as the interface for integrated upstream and midstream operations.
An implementation committee chaired by the Minister of Finance and Coordinating Minister of the Economy will oversee the reforms. Other members include the Attorney-General of the Federation, Minister of Budget and National Planning, Minister of State for Petroleum Resources (Oil), Chairman of the Federal Inland Revenue Service, Special Adviser to the President on Energy, and the Director-General of the Budget Office.
However, industry analysts noted that an executive order is not enough since it can’t override a stipulated law, advising the president to write to the National Assembly seeking an amendment to the PIA.
