President Bola Tinubu’s new Executive Order is set to significantly increase revenue allocations to federal, state, and local governments, with projections indicating a potential boost of nearly N15tn to the Federation Account.

The directive mandates that royalty oil, tax oil, profit oil, profit gas, and other government earnings under Production Sharing Contracts be paid directly into the Federation Account. The policy, which took effect on February 13, 2026, aims to curb revenue leakages, eliminate excessive deductions, and strengthen remittances to the Federation Accounts Allocation Committee (FAAC).

An analysis of 2025 revenue inflows shows that about N14.57tn in oil and gas-related funds will now be redirected. The Nigerian National Petroleum Company Limited is projected to forgo approximately N906.91bn previously retained as management fees and Frontier Exploration Fund deductions. Oil and gas royalties totalling N7.55tn, alongside gas flaring penalties of N611.42bn collected by the Nigerian Upstream Petroleum Regulatory Commission, will also be paid directly into the Federation Account.

In addition, N4.905tn generated from Petroleum Profits Tax and Hydrocarbon Tax, as well as N596.61bn from the Midstream and Downstream Gas Infrastructure Fund, will now be subject to statutory allocation.

Under the Petroleum Industry Act, 30 per cent of Production Sharing Contract profits funded frontier basin exploration, while another 30 per cent was retained as NNPC management fees. The Executive Order scraps both arrangements.

Tinubu said excessive deductions and overlapping funds have weakened remittances, stressing that oil and gas revenues must “serve Nigerians first.”

If fully implemented, the reform could ease fiscal pressures on subnational governments, reduce budget deficits, and mark a major shift toward transparency and accountability in Nigeria’s oil and gas sector.