President Bola Ahmed Tinubu has issued an executive order stopping the Nigerian National Petroleum Company Limited (NNPCL) from deducting management fees and Frontier Exploration Fund contributions before remitting revenues to the Federation Account.
The directive effectively blocks about N2.1tn retained between 2022 and 2025.
An analysis of Federation Account Allocation Committee (FAAC) records shows NNPC deductions rose sharply over four years: N20.7bn in 2022, N695.9bn in 2023, N452.6bn in 2024, and N906.9bn in 2025.
The policy now mandates full oil and gas revenue remittance before operational expenses are approved through the national budget process.
Oil Revenue Transparency and FAAC Remittances
The executive order prioritises constitutional fiscal provisions over certain funding arrangements under the Petroleum Industry Act (PIA). Automatic deductions—covering NNPC management fees and the Frontier Exploration Fund—are suspended. All oil revenues must first enter the Federation Account.
State governments and fiscal transparency advocates say the reform will boost FAAC allocations, strengthen oil revenue transparency, and increase distributable income.
Analysts argue that if the suspension had taken effect earlier, the federation could have retained the entire N2tn, supporting infrastructure and fiscal stability.
Volatility in NNPC Deductions
Data highlights extreme volatility in retained earnings. In 2023 and 2024, month-to-month deductions swung dramatically, reflecting fluctuating production sharing contract (PSC) profits.
The Frontier Exploration Fund alone received N453.5bn in 2025, though below its N710.5bn budget.
The same 30 percent structure applied to management fees, mirroring frontier allocations.
Energy experts note that such volatility intensified debates about oil sector governance and revenue accountability.
Industry Concerns Over Oil Sector Investment
Industry operators warn the directive could disrupt deepwater PSC operations, investor confidence, and crude-backed financing arrangements.
The Frontier Exploration Fund, designed to support exploration in basins like Chad and Sokoto, may require alternative funding through the federal budget or private investment.
While supporters hail the move as a landmark oil revenue reform, stakeholders agree its success depends on disciplined implementation, regulatory clarity, and balancing fiscal transparency with sustained oil and gas investment.
