Remittance of oil and gas revenues will now go directly into the Federation Account following a landmark Executive Order signed by President Bola Tinubu today, March 21, 2026. This directive aims to eliminate the “administrative leakages” created by the Petroleum Industry Act (PIA) of 2021, which allowed the NNPC Limited to retain a significant portion of revenues for frontier exploration and management fees. According to the State House, the new order mandates that the 30% profit from production sharing contracts, previously earmarked for the Frontier Exploration Fund, must henceforth be transferred to the central pool for sharing among the three tiers of government. This move is expected to significantly boost the monthly FAAC allocations to states and local governments, providing much-needed funds for healthcare, education, and infrastructure projects.
The issue of revenue remittance has been a major point of contention between the federal and state governments since the transition of the NNPC to a limited liability company. Governors have frequently complained that the deductions for “frontier exploration” were opaque and deprived their states of essential resources. Daily Trust reports that the President also suspended the payment of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund, directing that such proceeds should also be remitted to the Federation Account. By centralizing the remittance process, the Federal Government seeks to ensure that national wealth is distributed more equitably and transparently. Financial experts suggest that this shift could add over N500 billion to the Federation Account quarterly, providing a fiscal cushion against global oil price volatility.
While the Executive Order is a win for state governments, it poses a new challenge for NNPC Limited, which must now operate strictly as a commercial entity without the “safety net” of government-retained funds. Gopedia Media’s economic desk notes that the order also eliminates the 30% management fee previously collected by the company on profit oil. This forced efficiency is intended to make the oil giant more competitive on the global stage, similar to Saudi Aramco or Petrobras. However, some industry stakeholders warn that cutting off the Frontier Exploration Fund could slow down the discovery of new oil reserves in inland basins. Despite these concerns, the Presidency remains firm that the immediate needs of the Nigerian people for improved social services outweigh the long-term speculative benefits of frontier drilling. The implementation committee for this remittance reform has already been inaugurated to ensure compliance starting from the next fiscal cycle.