President Bola Tinubu has signed an Executive Order aimed at increasing the funds flowing into Nigeria’s Federation Account by removing unnecessary deductions under the Petroleum Industry Act (PIA).
The move is based on the Constitution, which gives the federal government ownership and control over all minerals, oil, and gas in Nigeria.
The order restores revenue entitlements for federal, state, and local governments that were reduced in 2021 when the PIA was enacted.
Under the previous arrangement, the Nigerian National Petroleum Company (NNPC) Limited kept 30% of the country’s oil earnings as management fees and an additional 20% of its profits for operational needs.
Another 30% was set aside for exploration projects, and various funds were created to manage gas flaring penalties and environmental remediation.
Officials noted that these multiple deductions caused a large portion of oil revenue to be diverted away from the Federation Account.
They also pointed out that the retained earnings by NNPC were already sufficient to cover its functions, making additional deductions unnecessary.
The Executive Order introduces measures to reduce revenue leakages, improve transparency, and remove overlapping structures within the PIA.
It also repositions NNPC Limited strictly as a commercial company, limiting its role as a concessionaire in profit-sharing contracts and ensuring that the government receives its fair share.
