The Oil and Gas policy advocacy group OAL has praised President Bola Ahmed Tinubu for issuing the Executive Order directing the direct remittance of oil and gas revenues into the Federation Account, describing the move as a bold intervention to strengthen Nigeria’s fiscal federalism and constitutional governance.
In a submission to the Implementation Committee chaired by the Honourable Minister, OAL, through its Principal Partner, Olisa Agbakoba, said the Order marks a turning point in efforts to restore transparency and accountability in the management of Nigeria’s petroleum revenues.
Agbakoba noted that the Executive Order requires that Royalty Oil, Tax Oil, Profit Oil and Profit Gas be paid directly into the Federation Account in line with Section 162 of the 1999 Constitution (as amended).
The Order also eliminates management fees on Profit Oil and Profit Gas, redirects Frontier Exploration Fund proceeds to the Federation Account, and suspends gas flare penalty payments into designated industry funds.
According to him, the directive directly confronts longstanding concerns over revenue leakages under the Petroleum Industry Act (PIA), particularly structural arrangements involving NNPC Limited and multinational oil firms.
He argued that the existing governance model allowed NNPC Limited to function simultaneously as a commercial operator and concessionaire, creating what OAL described as a structural conflict that weakened remittances due to federal, state and local governments.
“The Executive Order affirms the supremacy of Section 162 of the Constitution and reinforces the principle that all Federation revenues must be paid into the Federation Account,” OAL stated.
Push for Structural Changes
Despite commending the President’s action, Agbakoba maintained that deeper reforms are necessary to fully achieve fiscal sovereignty in the petroleum sector.
He identified two key areas requiring urgent attention in the course of implementation and the broader review of the PIA.
First, OAL called for the privatisation of NNPC Limited, insisting that government should withdraw from direct commercial participation in oil and gas operations.
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Nigeria does not require a state-owned oil company to drive exploration and production,” Agbakoba said, adding that a competitive private sector can effectively perform that role while government focuses on regulation and revenue collection.
He argued that NNPC Limited has historically retained a significant proportion of oil and gas revenues through various statutory and structural mechanisms, and recommended that the Implementation Committee consider formal proposals for its privatisation.
Review of JV and PSC Frameworks
Secondly, OAL contended that while the Executive Order mandates direct payment of government entitlements under Production Sharing Contracts (PSCs) beginning February 13, 2026, it does not address the underlying contractual frameworks of Joint Venture (JV) and PSC arrangements.
Agbakoba said these structures enable international oil companies to recover costs before government profit shares are calculated, thereby limiting net revenue to the Federation.
To address this, OAL proposed a phased transition away from existing JV and PSC arrangements within a clearly defined timeframe.
He said such an approach would respect Nigeria’s international obligations and investor expectations while gradually strengthening sovereign control over petroleum resources. A structured and legislatively supported transition, he added, would reduce the risk of disputes or arbitration claims.
Broader Fiscal Impact
OAL linked Nigeria’s revenue challenges — including fiscal deficits, debt pressures and limited public investment — to declining oil and gas remittances under the current framework.
Agbakoba expressed confidence that the Executive Order could significantly enhance revenue flows to the Federation Account, improve service delivery across all tiers of government and boost investor confidence through improved transparency.
He reaffirmed OAL’s readiness to support the Implementation Committee with technical input as it reviews the PIA and implements the new directive.
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This presents a rare opportunity to recalibrate Nigeria’s petroleum governance framework in line with constitutional mandates and national economic priorities,” he said.
