President Bola Tinubu’s latest Executive Order on oil and gas revenue remittances is poised to significantly raise distributable funds for federal, state and local governments, with fresh estimates suggesting the reform could unlock about ₦14.57 trillion in additional allocations.
The directive, which mandates the direct payment of royalty oil, tax oil, profit oil, profit gas and other contractual revenues into the Federation Account, is being positioned as a major fiscal recalibration aimed at expanding government revenues at a time of mounting expenditure pressures.
Under previous arrangements shaped by provisions of the Petroleum Industry Act, portions of oil and gas earnings were subjected to multiple deductions before reaching the Federation Account. These included management fees, frontier exploration allocations and other statutory charges.
With the new order, such deductions are to be curtailed, ensuring that gross revenues from production sharing, profit sharing and risk service contracts flow directly into the central revenue pool for distribution by the Federation Account Allocation Committee (FAAC).
An analysis of 2025 FAAC submissions indicates that the Nigerian National Petroleum Company had been projected to remit about ₦906.91 billion in management fees and frontier exploration funds. In addition, oil and gas royalties totalling ₦7.55 trillion, alongside ₦611.42 billion in gas flaring penalties collected by the Nigerian Upstream Petroleum Regulatory Commission, are now expected to be paid directly into the Federation Account.
The Revenue Mobilisation Allocation and Fiscal Commission described the move as a structural reset of Nigeria’s revenue architecture. In a statement issued by its Chairman, Dr Mohammed Shehu, the Commission said the order would “restore transparency, eliminate revenue leakages, and strengthen the revenue base of the three tiers of government.”
According to the Commission, earlier frameworks created what it termed “layered deductions and fragmented oversight,” which reduced net inflows available for distribution. By mandating direct remittance, the Executive Order reinforces constitutional provisions — particularly Sections 5 and 44(3) of the 1999 Constitution — that vest control of mineral resources in the Federal Government for the benefit of all Nigerians.
RMAFC noted that it had repeatedly called for reforms to address revenue retention and erosion outside the Federation Account, including discussions at a February 9, 2026 retreat in Enugu State.
For subnational governments grappling with rising wage bills, infrastructure gaps and security costs, the projected revenue boost could ease fiscal constraints and improve budget predictability.
The Commission stressed that the reform strengthens its constitutional oversight mandate under Paragraph 32 of Part I of the Third Schedule, enabling closer monitoring of accruals and disbursements from the Federation Account.
Beyond immediate revenue gains, fiscal analysts say the real impact of the order will depend on transparent implementation, strict compliance by relevant agencies, and sustained oversight to prevent new forms of revenue diversion.
If fully enforced, the policy marks one of the most consequential adjustments to Nigeria’s oil revenue management framework since the enactment of the Petroleum Industry Act, with far-reaching implications for fiscal federalism and public finance stability.