President Bola Tinubu has signed a new executive order aimed at protecting and boosting oil and gas revenues accruing to the Federation, eliminating wasteful spending, and dismantling duplicative structures within the sector.
The President’s Special Adviser on Information and Strategy, Bayo Onanuga, disclosed this in a statement on Wednesday. He said the Executive Order was issued pursuant to Section 5 of the 1999 Constitution (as amended).
The directive is anchored on Section 44(3) of the Constitution, which vests the ownership and control of all minerals, mineral oils, and natural gas in Nigeria—including those in territorial waters and the Exclusive Economic Zone—in the Federal Government.
According to the statement, the Executive Order seeks to restore the constitutional revenue entitlements of the Federal, State, and Local Governments, which were altered following the enactment of the Petroleum Industry Act in 2021.
The government noted that the Act created structural and legal mechanisms that have led to significant revenue losses to the Federation through various deductions, charges, and fees.
Under the existing framework, Nigerian National Petroleum Company Limited retains 30 percent of the Federation’s oil revenues as a management fee on profit oil and profit gas from production sharing contracts, profit sharing contracts, and risk service contracts.
The statement explained that in addition to an existing 20 percent retention, the extra 30 percent management fee is considered unjustifiable, as retained earnings are deemed sufficient to cover the company’s operational responsibilities under the contracts.
It further pointed out that NNPC Limited also retains another 30 percent of oil and profit gas under the same contract arrangements as the Frontier Exploration Fund, as provided under Sections 9(4) and (5) of the PIA.
The government expressed concern that allocating such substantial funds to speculative frontier exploration could result in large idle cash balances and inefficient spending, particularly at a time when public resources are urgently needed for national priorities such as security, education, healthcare, and energy transition investments.
The statement also referenced the Midstream and Downstream Gas Infrastructure Fund established under Section 52(7)(d) of the PIA and funded through gas flaring penalties under Section 104. The fund is intended to support environmental remediation and relief for host communities affected by gas flaring.
However, it noted that Section 103 of the PIA had already created a dedicated Environmental Remediation Fund, administered by the Nigerian Upstream Petroleum Regulatory Commission, to finance the rehabilitation of communities impacted by upstream petroleum activities, including gas flaring.
The government argued that the existence of overlapping funds and levies has contributed to inefficiencies within the sector, which the new Executive Order seeks to address in order to strengthen revenue management and ensure optimal use of national resources.
