Since 13 February, when President Bola Tinubu announced the Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity—aimed at restoring constitutional control over Nigeria’s oil revenues—questions have arisen as to whether the move was taken in good faith or was simply an executive flex by the administration.
The directive mandates that all petroleum revenues be remitted directly to the Federation Account, effectively halting certain internal revenue retention mechanisms previously allowed under the Petroleum Industry Act (PIA).
This covers all government entitlements, including:
- Oil and gas profits formerly retained by NNPC
- Royalties and oil tax collected by upstream regulator NUPRC
- Revenue from gas flare penalties collected by the Midstream Downstream Infrastructure Fund (MDGIF)
In addition, the NNPC has been stripped of the right to collect a 30% management fee on oil and gas profits, though its 20% share of profits earmarked for working capital and future investment remains untouched.
In some quarters, rumours suggest the directive is intended to centralise oil revenue control under government loyalists.
Petroleum unions have warned that the new policy could cripple NNPC’s ability to cover operational costs and finance exploration, potentially putting thousands of jobs at risk. They have called for its immediate reversal.
The presidency, however, insists the policy is driven by a resolve to plug structural leakages, which it claims have historically diverted up to two‑thirds of potential oil revenue away from the government.
Tinubu has argued that the intervention is a constitutional duty to free up revenues trapped in layers of charges and retention mechanisms, making them available for development.
In this article, we examine who exactly stands to benefit—or lose—from the new order.
The losers
NNPC Limited might be the biggest “loser” in terms of immediate cash flow. It can no longer collect the 30% management fee or the 30% Frontier Exploration Fund from profit oil and gas.
Analysts warn this could strain its liquidity and its ability to meet ongoing financial obligations to vendors and lenders.
However, this move is expected to eliminate issues of unremitted funds and curb financial corruption within NNPC, which has long been a persistent and critical problem. Several high‑profile investigations are ongoing into missing billions amid deep‑seated systemic flaws.
A 2016 BBC report revealed that NNPC failed to remit as much as $16 billion (N22.14 trillion) in oil revenues to the Federation Account in a single cycle, with the World Bank repeatedly raising concerns over what should have been full statutory payments.
A December 2025 ICPC Integrity Report flagged NNPC as a “high corruption risk” due to significant procurement infractions and weak whistleblower protections.
Earlier this year, the Economic and Financial Crimes Commission (EFCC) arrested several former top officials, including former CFO Umar Ajiya Isa and former MDs of the Warri and Port Harcourt refineries, over alleged diversion of funds intended for the Turn Around Maintenance (TAM) of Nigeria’s three major refineries.
NNPC’s former chief executive, Mele Kyari, has also faced multiple investigations since leaving office. In August 2025, a court ordered the freezing of bank accounts linked to him after the EFCC traced suspicious inflows totalling over ₦661 million ($477,591) and more than ₦80 billion ($57.8 million) in personal accounts.
The new management of NNPC has confirmed an ongoing forensic audit of the company’s books in a bid to increase transparency and scrutinise oil revenue deductions.
Another loser under the new policy is frontier basin development, which involves the exploration and exploitation of oil and gas in “untapped” or “under‑explored” sedimentary basins outside the traditional Niger Delta.
The Petroleum Industry Act (PIA) 2021 identifies several basins—mostly inland—as frontier areas, including Anambra, the Benue Trough (Lower, Middle, Upper), Bida, Chad (Nigerian sector), Dahomey, and Sokoto Basins.
According to the PIA, 30% of NNPC’s profit was held in a dedicated escrow account to finance these high‑risk exploration activities. However, with the suspension of the 30% Frontier Exploration Fund, exploration in regions outside the Niger Delta faces an uncertain funding future.
Critics had long argued that diverting 30% of NNPC profits to “high‑risk” exploration instead of the Federation Account was fiscally irresponsible. Private investors have historically avoided these basins due to high costs, lack of infrastructure, and security risks such as banditry in the North.
While the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) claims it approved the release of about $140 million (N193.7 billion) from the fund for certified exploration activities as of late 2025, only three projects appear to have yielded proven reserves:
- Kolmani River Field (Upper Benue Trough): estimated 1 billion barrels of oil and 500 billion cubic feet of natural gas
- Ebenyi‑1 Well (Middle Benue Trough): initial data suggests reserves of over 1 billion barrels of oil equivalent
- Wadi‑2 Well (Chad Basin): drilling commenced in Borno State in mid‑2023
Furthermore, the country’s two oil sector regulators—NUPRC and NMDPRA—also stand to lose. For instance, gas flare penalties previously channelled to the Midstream & Downstream Gas Infrastructure Fund (MDGIF) must now be deposited directly into the Federation Account.
This could slow down domestic gas infrastructure projects.
Experts have raised concerns that NUPRC may lose some of its operational independence if it has to rely on the standard federal budget process rather than retained royalties to fund its oversight functions.
The winners
State and local governments are the primary beneficiaries of the new order, which is projected to add roughly N1.5 trillion–N2 trillion ($1 billion–$1.44 billion) annually to the Federation Account.
This increases the pool of funds available for monthly Federation Account Allocation Committee (FAAC) distributions. The FAAC revenue‑sharing formula remains primarily based on the vertical allocation structure established in 1992, though a significant reform to Value Added Tax (VAT) distribution took effect in early 2026.
According to the vertical allocation formula, the total distributable pool is split among the three tiers of government as follows:
– Federal Government: 52.68%
– State Governments: 26.72%
– Local Government Councils: 20.60%
Before this split, 13% of mineral revenue (oil and gas) is shared exclusively among the nine oil‑producing states as a “derivation fund.”
FAAC allocations are funded heavily by proceeds from the oil and gas sector. Despite its outsized influence, the sector directly contributes only a relatively small portion of total Gross Domestic Product (GDP).
Nevertheless, it remains the backbone of Nigeria’s economy, accounting for about 85% of foreign exchange earnings and around 65% of government fiscal revenue.
Beyond the three tiers of government, the general public also stands to gain significantly. Supporters argue that by ending “opaque” deductions, the government can better fund national priorities such as security, education, and healthcare, since FAAC allocations account for more than 50% of the fiscal needs of states.
Organisations like the Nigeria Extractive Industries Transparency Initiative (NEITI) have applauded the move for reducing leakages and enforcing constitutional supremacy over revenue management.
Overall, the new executive order is seen as a bold step that will not only boost government revenues but also enforce financial and operational discipline at NNPC as it transitions into a truly commercial entity.
