President Bola Tinubu has signalled a broader overhaul of Nigeria’s petroleum governance framework following his executive order mandating direct remittance of oil and gas revenues into the Federation Account.
Presidency sources confirm that beyond the immediate fiscal reset, preparations are underway for a comprehensive review of the Petroleum Industry Act (PIA) to address structural and fiscal anomalies identified during implementation.
“This executive order is the first corrective layer,” a senior Aso Rock official said. “The President has made it clear that where structural defects undermine constitutional order or fiscal stability, they must be revisited.”
From Implementation Gaps to Structural Reform
Enacted in 2021, the PIA was hailed as a landmark reform to modernise Nigeria’s petroleum sector, improve governance and attract investment. However, presidency insiders say aspects of its revenue architecture — particularly around Production Sharing Contracts (PSCs) — produced unintended fiscal distortions.
Under post-PIA implementation, only 40 percent of PSC profit oil was remitted to the Federation Account. The remaining 60 percent was retained by the Nigerian National Petroleum Company Limited (NNPC), split between a 30 percent management fee and a 30 percent Frontier Exploration Fund. Financial records submitted to the Federation Account Allocation Committee (FAAC) in 2025 indicate that the affected revenue streams amount to about N14.57 trillion.
Presidency sources argue that such retention mechanisms created structural imbalance between the Federation and its national oil company.
“When the Federation receives less than half of a major revenue stream before deductions, questions naturally arise,” a presidency adviser noted. “The executive order corrects that imbalance pending legislative refinement.”
Constitutional concerns
Legal advisers within government say Sections 44(3) and 162 of the Constitution guided the President’s decision. Section 44(3) vests ownership and control of mineral resources in the Government of the Federation, while Section 162 mandates that all revenues accruing to the Federation be paid into the Federation Account.
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