Tinubu Order Targets N15tn Allocation Increase
The Federal Government, states and local governments may receive an additional N14.57tn in revenue allocations following a new Executive Order signed by President Bola Tinubu directing that key oil and gas revenues be paid directly into the Federation Account.
The directive mandates that royalty oil, tax oil, profit oil, profit gas and other earnings due to the Federation under Production Sharing, Profit Sharing and Risk Service Contracts be remitted straight to the Federation Account. The order also scraps the 30 per cent Frontier Exploration Fund and halts the 30 per cent management fee on profit oil and gas previously retained by the Nigerian National Petroleum Company Limited.
Analysis of 2025 revenue inflows submitted to the Federation Account Allocation Committee shows that affected revenue streams could total about N14.57tn. This includes projected remittances of N906.91bn in management fees and frontier exploration funds, N7.55tn in oil and gas royalties, N611.42bn in gas flaring penalties, and N4.905tn generated from Petroleum Profits Tax and Hydrocarbon Tax.
The Executive Order, which took effect from February 13, 2026, also directs the Nigerian Upstream Petroleum Regulatory Commission to remit all gas flare penalties directly into the Federation Account. In addition, payments into the Midstream and Downstream Gas Infrastructure Fund will now be subject to public procurement laws, significantly altering the revenue structure of the sector.
Under the Petroleum Industry Act implemented in 2021, only 40 per cent of proceeds from Production Sharing Contracts were paid into the Federation Account, while 60 per cent was retained by NNPC for frontier exploration and management costs. The new directive effectively ends this arrangement, positioning NNPC to operate strictly as a commercial entity without statutory deductions from Federation revenues.
President Tinubu said the reform aims to end excessive deductions and structural distortions that have weakened remittances to the Federation Account. According to him, oil and gas revenues must serve Nigerians first, adding that the policy aligns with his administration’s “Nigeria First” agenda and broader efforts to strengthen fiscal discipline, improve transparency and safeguard national revenue.