KEY POINTS

• Executive Order targets PIA deductions.
• NNPC profit retentions to be reviewed.
• Move aims to boost Federation Account revenues.

President Bola Tinubu has signed an Executive Order aimed at increasing oil and gas revenues remitted to Nigeria’s Federation Account by curbing deductions under the Petroleum Industry Act.

In a statement issued by presidential spokesman Bayo Onanuga, the presidency said the order draws authority from Section 44(3) of the Constitution, which vests ownership and control of mineral resources in the Government of the Federation. The directive aims to restore revenue entitlements to federal, state, and local governments, which officials say the Petroleum Industry Act reduced when lawmakers introduced new provisions in 2021.

Executive Order Targets PIA Deductions

Under the current framework, NNPC Limited retains 30 percent of the Federation’s oil revenues as a management fee on profit oil and profit gas derived from production sharing, profit sharing and risk service contracts. The company also retains 20 percent of its profits for working capital and future investments.

The presidency said the additional 30 percent management fee is unjustified because the agency already retains 20 percent of profits. NNPC Limited also allocates 30 percent of profit oil and profit gas to the Frontier Exploration Fund under Sections 9(4) and (5) of the PIA.

The statement argued that such deductions exceed global norms and divert more than two-thirds of potential remittances from the Federation Account, contributing to declining net oil revenue inflows.

It also referenced the Midstream and Downstream Gas Infrastructure Fund, financed through gas flaring penalties, noting that Section 103 of the PIA already establishes a separate Environmental Remediation Fund for impacted communities.

Revenue Reform and NNPC Restructuring

The Executive Order aims to eliminate what it described as duplicative deductions and overlapping provisions across the PIA framework and NNPC Limited’s governing structure.

Tinubu also raised concerns about NNPC Limited’s continued role as a concessionaire under production sharing contracts while operating as a commercial entity, citing potential distortions.

The order introduces measures to enhance transparency, reduce revenue leakages and reposition NNPC Limited strictly as a commercial enterprise, while protecting the Federation’s financial interests. The presidency said it considers the reforms urgent because of their impact on national budgeting, debt sustainability, and economic stability.