Tinubu scraps NNPC’s 30% management fee, mandates direct remittance to Federation Account

President Bola Ahmed Tinubu has issued an Executive Order abolishing the 30 per cent management fee previously retained by the Nigerian National Petroleum Company Limited (NNPCL) on profit oil and profit gas revenues, directing that the funds be paid directly into the Federation Account.

The directive, announced in a State House statement signed by the President’s Special Adviser on Information and Strategy, Bayo Onanuga, is aimed at boosting government revenues and strengthening fiscal discipline in the oil and gas sector.

According to the Presidency, the order seeks to “safeguard and enhance oil and gas revenues for the Federation, curb wasteful spending, eliminate duplicative structures in this critical sector of the national economy, and redirect resources for the benefit of the Nigerian people.”

The President signed the order pursuant to Section 5 of the 1999 Constitution (as amended), which grants executive powers to the President, and anchored it on Section 44(3) of the Constitution, which vests ownership and control of all minerals, mineral oils and natural gas in the Government of the Federation.

Under the existing framework of the Petroleum Industry Act (PIA), NNPCL had been retaining 30 per cent of the Federation’s oil revenues as a management fee on profit oil and profit gas derived from Production Sharing Contracts (PSCs), Profit Sharing Contracts and Risk Service Contracts. The company also retains 20 per cent of its profits to cover working capital and future investments.

However, the Federal Government maintained that with the 20 per cent profit retention already in place, the additional 30 per cent management fee was no longer justifiable. It argued that the retained earnings were sufficient to support NNPCL’s operational responsibilities under the various contracts.

The gazetted Executive Order provides that NNPCL “will no longer be entitled to the 30% management fee on profit oil and profit gas revenues,” stating that such revenues must henceforth accrue directly to the Federation Account.

It further mandates that all operators and contractors handling oil and gas assets under Production Sharing Contracts remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other government-entitled interests directly to the Federation Account with effect from February 13, 2026.

The Presidency explained that the move is intended to eliminate overlapping and redundant provisions within the PIA framework and NNPCL’s governing structure, particularly those that result in multiple layers of deductions which diminish revenues due to the Federation.

Tinubu described the reform as one of urgent national importance, citing its implications for national budgeting, debt sustainability, economic stability and the overall well-being of Nigerians.

An implementation committee comprising key ministers and senior government officials has been constituted to ensure coordinated execution of the directive. The administration also signalled plans to undertake a comprehensive review of the Petroleum Industry Act in consultation with stakeholders to address fiscal and structural gaps identified in the law.