President Bola Ahmed Tinubu has initiated preparations for a comprehensive review of the Petroleum Industry Act after issuing an executive order that mandates direct remittance of oil and gas revenues into the Federation Account, presidency sources said.
The executive order issued by Tinubu followed a directive requiring the direct remittance of all oil and gas revenues into the Federation Account.
The order is aimed at addressing fiscal and structural issues identified during the implementation of the Petroleum Industry Act, which was enacted in 2021 to modernise the petroleum sector and governance framework.
Presidency officials confirmed that the executive order represents an initial corrective step, with plans underway to engage in broader reforms of the Petroleum Industry Act.
The review is expected to focus on structural and fiscal anomalies that have emerged during implementation, particularly regarding revenue remittance mechanisms.
Under the current post-PIA implementation framework, only 40 per cent of profit oil from Production Sharing Contracts is remitted to the Federation Account, while the remaining 60 per cent was retained by the Nigerian National Petroleum Company Limited through management fees and frontier exploration allocations.
Figures presented to the Federation Account Allocation Committee in 2025 show that these revenue streams totalled about N14.57 trillion.
Presidency sources said the executive order abolishes automatic deductions, including the 30 per cent Frontier Exploration Fund and 30 per cent management fee previously retained by NNPC, while future exploration financing is expected to fall under transparent legislative oversight.
Legal advisers within government cited constitutional provisions as the foundation for the directive, noting that Sections 44(3) and 162 of the 1999 Constitution vests ownership of mineral resources in the Government of the Federation and mandates that all revenues go into the Federation Account.
The executive order also eliminates the automatic management fee previously retained by NNPC on profit oil and profit gas.
Presidency officials said this move reinforces NNPC’s transition into a commercial entity, separating corporate earnings from sovereign revenue flows.
Another structural matter the review is expected to address is the shift from dividend-based revenue flows to direct remittances. Under previous arrangements, reliance on declared dividends from NNPC introduced fiscal uncertainty.
The executive order restores direct remittance of royalty oil, tax oil, profit oil and profit gas to the Federation Account, reducing dependence on dividend substitution as a revenue mechanism.
The order also mandates that penalties collected by the Nigerian Upstream Petroleum Regulatory Commission for gas flaring be paid into the Federation Account, and that expenditures from gas infrastructure funds comply with public procurement laws.
Presidency sources said these measures aim to enhance transparency and strengthen oversight.
An implementation committee has been approved to oversee the directive’s execution, and consultations with stakeholders and legislative leaders are expected as part of the review process.
Presidency officials said the objective of the review is refinement of the PIA’s structural framework without undermining its core goals of investment attraction and sector efficiency.
