President Tinubu Mandates Direct Oil and Gas Revenue Payment to Federation Account
President Bola Tinubu has taken decisive action to reform Nigeria's petroleum revenue management system by signing an executive order that requires all oil and gas revenues to be paid directly into the Federation Account. This significant move, announced on February 19, 2026, aims to strengthen public finances and eliminate revenue leakages that have plagued the nation's petroleum sector for years.
Constitutional Basis and Immediate Implementation
The presidential directive, signed pursuant to Section 5 of the Nigerian Constitution, seeks to enforce the federal government's constitutional ownership and control over mineral resources as provided under Section 44(3). According to a statement released by Bayo Onanuga, Special Adviser to the President on Information and Strategy, the order took immediate effect from February 13, 2026, marking a swift implementation timeline for this crucial financial reform.
The executive order specifically mandates that all operators and contractors holding oil and gas assets under production sharing contracts must now remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other government-entitled revenues directly to the federation account. This represents a fundamental shift from previous arrangements where these revenues passed through various industry funds and corporate structures before reaching government coffers.
Addressing Structural Distortions in Petroleum Industry
The Tinubu administration has identified what it describes as structural and fiscal distortions introduced by the Petroleum Industry Act (PIA) that have significantly reduced net inflows to the federation account. Under the revised arrangement, revenues that were previously subject to multiple deductions and charges will now flow directly into the central revenue pool shared by federal, state, and local governments.
In a particularly notable provision, the President has directed that proceeds from gas flare penalties, which were previously paid into the Midstream and Downstream Gas Infrastructure Fund, must now be remitted directly to the federation account. Furthermore, spending from this fund will be subject to existing public procurement laws and financial regulations, adding an additional layer of accountability.
Broader Petroleum Industry Reforms and Implementation Committee
Beyond the immediate executive order, President Tinubu has announced plans for a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address what the government has identified as fiscal and structural anomalies within the current legal framework. This broader review signals the administration's commitment to systemic reform rather than piecemeal adjustments.
To ensure effective implementation of the new directive, the President has constituted a high-level implementation committee comprising senior government officials including the Minister of Finance, the Attorney-General of the Federation, the Minister of Budget and National Planning, and the Minister of State for Petroleum Resources (Oil). This committee will oversee the execution of the revenue remittance order and coordinate related reforms.
Urgent National Importance and Fiscal Context
The Presidency has emphasized that these measures are of urgent national importance, particularly given Nigeria's current fiscal pressures and rising expenditure demands. Oil receipts remain critical to national budgeting, debt management, economic stability, and funding for essential services including security, healthcare, education, and energy transition initiatives.
This reform comes against the backdrop of Nigeria's substantial petroleum earnings, with the nation generating an estimated N55.5 trillion from crude oil sales in 2025, up from N50.88 trillion in 2024. However, analysts have noted that these figures do not reflect actual government earnings due to costs and various deductions that have now been targeted by the new executive order.
The administration expects these measures to improve transparency, eliminate overlapping deductions, and enhance revenue flows to all three tiers of government, potentially marking a turning point in how Nigeria manages its most valuable natural resource revenues.
