Tinubu’s oil reform under pressure as FG retreats on revenue remittance

The Federal Government has adjusted the implementation framework of Executive Order 9 of 2026 on oil revenue remittances, effectively softening the directive that mandated direct payment of oil-related revenues into the Federation Account.

Under the revised approach, the Nigerian National Petroleum Company Limited (NNPC Ltd.) will continue lifting and commercializing crude oil on behalf of the government before remitting the proceeds into a designated Central Bank of Nigeria account, a shift from the initial directive requiring immediate direct remittance.

The modification followed deliberations at an implementation committee meeting last Wednesday, where stakeholders reviewed operational and structural concerns arising from the original order.

Backstory

President Bola Tinubu had, on 18 February 2026, issued the executive order directing that royalty oil, tax oil, profit oil, profit gas, and other revenues due to the Federation under petroleum contracts be paid directly into the Federation Account.

The order also scrapped the 30 per cent Frontier Exploration Fund provided under the Petroleum Industry Act (PIA) and discontinued the 30 per cent management fee on profit oil and profit gas retained by the national oil company.

The president said the reforms were intended to plug leakages and strengthen public finances.

“For too long, excessive deductions, overlapping funds, and structural distortions in the oil and gas sector have weakened remittances to the Federation Account,” Mr. Tinubu said at the time. “When revenues meant for federal, state, and local governments are trapped in layers of charges and retention mechanisms, development suffers.”

Operational realities

However, senior officials familiar with the implementation discussions say the government is not reversing the order outright but recalibrating how it will be executed.

One official explained that royalty and tax obligations are typically settled in barrels of crude oil rather than cash, making immediate remittance impractical.

“Royalties and taxes are not paid in dollars or naira but in barrels of crude oil. The crude must first be lifted and commercialized before revenue can be realized,” the official said.

Under the emerging framework, NNPC Ltd will continue to lift and sell crude oil before transferring the proceeds to the designated account.

“The company will lift and sell on behalf of the government and remit the realized revenue accordingly. That is the operational model being considered,” the source added.

Profit oil debate

Discussions are still ongoing regarding profit oil remittances.

Another official indicated that the government may opt to collect gross proceeds upfront and subsequently reimburse NNPC Ltd. for operational costs.

“The proposal being discussed is that government collects everything first and then settles operational expenses separately,” the source said.

But some stakeholders warn that this approach could undermine the commercial autonomy granted to NNPC Ltd under the Petroleum Industry Act.

“This funding structure risks taking the sector back to pre-PIA arrangements,” one official cautioned.

He noted that earlier funding models contributed to financial strain in the industry, including the accumulation of billions of dollars in cash call arrears owed to contractors and trading partners.

Reform credibility questions

The executive order, which took effect on 13 February 2026, invoked constitutional provisions vesting ownership and control of mineral resources in the federal government.

While the administration maintains that the policy is designed to improve transparency, eliminate revenue leaks, and boost remittances, the shift in implementation has raised questions about the durability and coherence of the reform agenda.

Analysts say the adjustment underscores the tension between fiscal centralization goals and the operational mechanics of Nigeria’s oil sector. This balancing act could shape the credibility of broader reforms under Mr. Tinubu’s administration.