President Bola Ahmed Tinubu’s Executive Order No. 9 of 2026 directing the direct remittance of oil and gas revenues into the Federation Account is emerging as one of the most consequential fiscal reforms since the enactment of the Petroleum Industry Act (PIA).
Signed on February 13, the order mandates that royalty oil, tax oil, profit oil, profit gas and related proceeds from production sharing, profit sharing and risk service contracts be paid directly into the Federation Account. It effectively suspends key retention mechanisms under the PIA, including the 30 per cent management fee on profit oil and profit gas and the 30 per cent Frontier Exploration Fund allocation.
Fiscal authorities say the move could significantly strengthen inflows to government coffers at a time Nigeria is grappling with mounting debt service obligations, infrastructure deficits and macroeconomic volatility.
The Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Bello Shehu, described the directive as “a bold, constitutionally grounded, and fiscally transformative intervention aimed at restoring transparency, eliminating revenue leakages, and strengthening the revenue base of the three tiers of government.”
According to RMAFC, prior to the order, structural provisions within the PIA created channels through which substantial Federation revenues were subjected to multiple deductions before reaching the Federation Account. These included layered charges such as management fees and frontier exploration allocations retained upstream.
An analysis of 2025 inflows submitted to the Federation Account Allocation Committee (FAAC) indicates that about ₦906.91 billion was projected as management fees and frontier exploration funds. In addition, oil and gas royalties totalling ₦7.55 trillion and gas flaring penalties of ₦611.42 billion were previously subject to fragmented remittance structures.
Based on those figures, estimates suggest that as much as ₦14.57 trillion in additional revenue allocations could accrue to federal, state and local governments if the order is fully implemented.
RMAFC said the reform would enhance transparency and improve cash flow predictability. “With this Executive Order, the constitutional architecture of revenue remittance is strengthened. It closes structural leakages, eliminates duplicative deductions, and ensures that revenues due to the Federation are remitted transparently,” Shehu stated.
At the centre of the reform is the recalibration of the fiscal relationship between the Federation and the Nigerian National Petroleum Company Limited (NNPCL). Under the PIA framework, NNPCL retained significant portions of upstream revenues before remitting the balance to the Federation Account. Critics argued that the arrangement reduced the Federation’s effective share of production sharing contract (PSC) profit oil to 40 per cent.
Although NNPCL pledged to remit ₦3.25 trillion in interim dividends in 2025, FAAC records indicate that no dividend was ultimately paid during the year.
Industry operators have also welcomed the executive action. The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) said the order would improve accountability and commercial discipline within NNPCL. In a statement signed by its national president, Dr Billy Gillis-Harry, the association described the directive as “courageous and reform-driven,” adding that centralised remittances would bolster public oversight and investor confidence.
Analysts say the fiscal implications extend beyond transparency. Stronger and more predictable inflows into the Federation Account could ease pressure on Nigeria’s balance sheet by improving debt servicing capacity and enhancing subnational budget planning. With oil prices subject to global volatility, securing full statutory remittances has become critical to stabilising public finances.
However, observers caution that implementation will determine the reform’s ultimate impact. Legal and legislative adjustments may still be required to permanently align the PIA with constitutional provisions on revenue remittance.
For now, fiscal authorities appear optimistic that the Executive Order could mark a decisive step toward restoring credibility to Nigeria’s petroleum revenue management and strengthening the country’s strained balance sheet.
