By Blessing Bature
President Bola Tinubu has approved a new Executive Order aimed at strengthening accountability in Nigeria’s oil and gas sector by ensuring improved remittance of revenues into the Federation Account.
The President’s Special Adviser on Information and Strategy, Bayo Onanuga, announced the development in a statement on Wednesday, explaining that the directive was issued pursuant to Section 5 of the 1999 Constitution (as amended).
The Executive Order is grounded in Section 44(3) of the Constitution, which places ownership and control of Nigeria’s mineral resources, including crude oil and natural gas found on land, in territorial waters, and within the Exclusive Economic Zone, under the Federal Government.
According to the statement, the new order is designed to protect the constitutional revenue rights of the Federal, State and Local Governments. It seeks to address concerns that provisions within the Petroleum Industry Act (PIA) of 2021 created financial arrangements that have reduced inflows into the Federation Account through various deductions and charges.
Under the current PIA framework, NNPC Limited retains 30 per cent of the Federation’s oil revenue as a management fee on profit oil and profit gas generated from Production Sharing Contracts, Profit Sharing Contracts and Risk Service Contracts. The Federal Government maintains that, considering an existing 20 per cent retention, the additional 30 per cent fee is excessive and not necessary for the company’s operational responsibilities.
The statement further highlighted that NNPC Limited also sets aside 30 per cent of its oil and profit gas earnings under the Frontier Exploration Fund, as provided in Sections 9(4) and (5) of the PIA. The government expressed concern that allocating such significant funds to frontier exploration could result in idle balances and inefficient spending, especially at a time when resources are needed for pressing national priorities such as security, education, healthcare and energy transition.
Additionally, the Midstream and Downstream Gas Infrastructure Fund (MDGIF), established under Section 52(7)(d) of the PIA and financed through gas flaring penalties under Section 104, was referenced in the statement. The fund is intended to support environmental remediation and relief efforts in host communities affected by gas flaring.
However, the government noted that Section 103 of the PIA already provides for an Environmental Remediation Fund, managed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), specifically for rehabilitating communities impacted by upstream petroleum operations, including gas flaring. It also mandates contributions from license holders for that purpose.
The Executive Order is expected to streamline revenue management in the oil and gas sector, eliminate overlapping financial structures, and boost funds available to all tiers of government for national development.
Juliet Ezeh is the founder and chief reporter at Westbridge Reporters with over 7 years of experience in journalism. She covers crime, industry, policy, and social developments, delivering timely and accurate reporting.