The Executive Order and Its Implications on Nigeria’s Oil and Gas Sector
On February 18, 2026, President Bola Tinubu introduced a significant shift in the management of Nigeria’s oil and gas revenues with an Executive Order (EO) that mandated direct remittance of these revenues to the Federation Account. This move has sparked considerable debate and raised questions about its long-term implications for the Nigerian economy.
The EO is seen as a bold attempt to address what many believe are systemic inefficiencies within the current structure of revenue distribution. It significantly alters the role of the Nigerian National Petroleum Company Limited (NNPC Limited), which had previously managed several key aspects of oil and gas revenue. According to the presidential spokesperson, Mr. Bayo Onanuga, this order was aimed at safeguarding and enhancing oil and gas revenues for the Federation, curbing wasteful spending, and eliminating duplicative structures.
Key Provisions of the Executive Order
The EO includes several critical provisions that alter the existing framework under the Petroleum Industry Act (PIA) of 2021:
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Frontier Exploration Fund: NNPC Limited will no longer collect and manage the 30% Frontier Exploration Fund. Instead, the 30% profit from oil and gas production sharing, profit sharing, and risk service contracts will be transferred directly to the Federation Account.
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Management Fee: The 30% management fee on profit oil and profit gas revenues, which were previously retained by NNPC Limited, will now go directly to the Federation Account.
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Direct Remittances: All operators/contractors of oil and gas assets under production sharing contracts will pay royalty oil, tax oil, profit oil, profit gas, and any other interest directly to the Federation Account starting from February 13, 2026.
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Gas Flare Penalties: Payments for gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund have been suspended. Proceeds from these penalties will now go directly to the Federation Account.
These changes are intended to eliminate “unjustified multiple layers of deductions” that have historically eroded revenues meant for the Federation Account. The goal is to ensure that the three tiers of government can focus on critical national priorities.
Historical Context and Concerns
The decision to implement this EO comes amid criticism of the poor implementation of capital expenditure in key sectors of the Nigerian economy in the 2024/2025 budgets. Many Nigerians have long been aware of the challenges surrounding the management of oil and gas revenues, particularly the influence of the NNPC Limited, which has often acted as a gatekeeper of these funds.
Some industry insiders argue that the previous structure allowed for significant leakages, where funds were delayed or misappropriated, creating opportunities for corruption and misuse. The political influence of the NNPC has also made it difficult to hold officials accountable, leading to a lack of transparency and oversight.
Despite these concerns, the EO has also drawn criticism from some quarters. The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has raised concerns that the order could undermine the PIA 2021, erode investor confidence, and lead to job losses. PENGASSAN President, Festus Osifo, called for the withdrawal of the order, arguing that it sets a dangerous precedent by using an Executive Order to override a law of the Federal Republic of Nigeria.
The Road Ahead
While the EO represents a step toward addressing long-standing issues in the oil and gas sector, its success will depend on how effectively it is implemented. Critics argue that without addressing leakages at the federal, state, and local levels, the impact of the EO may be limited.
There is also a need for stronger leadership at all levels of government to ensure that increased allocations are used efficiently and transparently. Many observers point out that the real challenge lies not in the availability of funds but in the lack of patriotic leadership, especially at the state level, where governors often spend public money without accountability.
As Nigeria continues to navigate its economic challenges, the effectiveness of this new arrangement will be closely watched. If implemented properly, it could mark a turning point in the management of the country’s most valuable resource. However, if the same patterns of mismanagement persist, the outcome may be disappointing.
