Tinubu’s NNPC order: A reform Nigeria cannot waste — by Tosin Adeoti
On February 19, President Bola Ahmed Tinubu signed an executive order mandating the direct remittance of key oil and gas revenues into the Federation Account. The directive removes the Nigerian National Petroleum Company Limited’s ability to retain the 30 percent Frontier Exploration Fund and the additional 30 percent management fee on profit oil and gas under production sharing arrangements.
The move has been widely described as a significant fiscal intervention. To understand why it matters, it is necessary to examine the long history of opacity surrounding the operations of Nigerian National Petroleum Company Limited, the controversies embedded in the Petroleum Industry Act framework, and how peer national oil companies manage similar responsibilities.
Concerns about NNPC’s financial transparency did not begin recently. They stretch back at least two decades and have been repeatedly documented by oversight bodies.
Between 1999 and 2014, several audit reports by the Nigeria Extractive Industries Transparency Initiative (NEITI) flagged persistent gaps in remittances and opaque deductions. One of the most widely cited episodes came in 2014, when the then Central Bank governor, Lamido Sanusi, alleged that up to 20 billion dollars in oil revenue had not been fully remitted by the national oil company. Subsequent forensic reviews revised the figures downward, but the episode reinforced longstanding doubts about revenue visibility in the sector.
NEITI’s 2021 Oil and Gas Industry Audit Report again noted that revenue leakages, delayed remittances, and complex deduction structures continued to weaken flows into the Federation Account. The agency has consistently recommended clearer remittance rules and stronger financial disclosures from the national oil company.
State governments have also repeatedly raised concerns at meetings of the Federation Account Allocation Committee (FAAC), particularly during periods when oil prices were strong but distributable revenues appeared comparatively weak.
The Petroleum Industry Act of 2021 sought to commercialise NNPC by transforming it into a limited liability company. However, the fiscal architecture embedded in the law created new tensions.
Sections 9(4) and 9(5) of the PIA allowed NNPC to retain 30 percent of profit oil and gas from production sharing contracts to finance exploration in frontier basins such as the Chad Basin, Sokoto Basin, Bida Basin, and the Benue Trough. Critics raised concerns that frontier exploration is high risk and slow to yield commercial discoveries in Nigeria, that the scale of retention was unusually large by international standards, and that funds could accumulate without clear near-term production impact. Available FAAC data show that in 2025 alone, deductions for the Frontier Exploration Fund were about ₦453.5 billion, significantly reducing distributable revenue over time.
Under the same PIA framework, NNPC retained another 30 percent of profit oil and gas as a management fee, even though the company was already permitted to keep 20 percent of its profits for working capital and investment. Fiscal analysts argued that layering these deductions meant the Federation Account was receiving roughly 40 percent of certain production sharing proceeds, while the national oil company retained the rest through multiple channels.
Government estimates based on 2025 flows suggest the executive order could affect up to ₦14.5 trillion in annual petroleum-related revenues when fully implemented. This includes about ₦7.55 trillion in oil and gas royalties, roughly ₦4.9 trillion in petroleum and hydrocarbon taxes, around ₦611 billion in gas flaring penalties, and approximately ₦906 billion in combined management fees and frontier exploration deductions.
Comparisons with peer national oil companies provide context. Malaysia’s Petronas operates under a clear dividend and tax framework, publishes audited annual reports, and makes consistent dividend payments to the government. In 2023, it reported revenue of roughly 343 billion Malaysian ringgit and paid dividends of about 40 billion ringgit. Brazil’s Petrobras, following governance reforms after the 2014 Lava Jato scandal, now publishes detailed financial statements and paid record dividends exceeding 30 billion dollars in 2023. Saudi Aramco, since its partial listing in 2019, publishes detailed results and paid dividends of about 98 billion dollars in 2023, structuring government take primarily through royalties, taxes, and dividends rather than layered deductions.
The February 2026 directive addresses overlapping deductions before revenues reach the Federation Account and seeks to resolve tensions created by NNPC’s dual role as commercial operator and quasi-fiscal gatekeeper. However, legal alignment with the Petroleum Industry Act, sustainable funding for frontier exploration, and stronger transparency practices remain critical to ensuring durable reform.
