Tinubu Slams Fresh Executive Order on NNPC as Oil Marketers Jubilate

Fresh uncertainty has gripped key institutions in Nigeria’s oil and gas sector following a new executive order by Bola Tinubu directing the immediate remittance of oil and gas revenues to the Federation Account for distribution among the three tiers of government.

The directive effectively halts the retention of certain internally generated revenues by agencies, sparking concerns within the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian National Petroleum Company Limited (NNPC), and the Midstream and Downstream Gas Infrastructure Fund (MDGIF).

At the heart of the controversy is the absence of a clearly defined alternative funding model for the NUPRC, particularly regarding the four per cent cost-of-collection framework established under the Petroleum Industry Act (PIA). Senior officials argue that the PIA deliberately insulated the commission from conventional budgetary processes to ensure operational independence, technical efficiency, and the ability to recruit and retain highly skilled professionals.

In 2024, the commission reportedly paid about N88bn in salaries and allowances, while generating approximately N322.8bn in 2025 from the cost-of-collection mechanism. Officials warn that returning the regulator to annual budget approvals through the National Assembly could expose it to bureaucratic delays, political pressure, and funding instability. They fear this could weaken oversight, monitoring, and enforcement functions in the upstream sector, potentially increasing risks of compromise in a sector already vulnerable to oil theft and vandalism.

Questions have also emerged over how the government plans to sustain frontier exploration and improve Nigeria’s reserve replacement ratio, especially as the Frontier Exploration Fund faces uncertainty. Industry sources say the directive creates ambiguity around the roles of frontier exploration services and the MDGIF at a time when Nigeria is targeting crude production of about three million barrels per day by 2030 and seeking over $12bn in annual investment.

Within NNPC, concerns focus on potential disruptions to production sharing contracts (PSCs), particularly in the deepwater segment. Officials note that between 400 and 500 staff oversee PSC operations across 39 sites, 14 of which are producing. They warn that altering established remittance structures—where royalties and taxes are lifted as crude barrels rather than paid in cash—could create confusion and unsettle contractual arrangements with international oil companies.

One senior official cautioned that the language of the order suggests royalties and taxes are paid in cash, whereas under PSC frameworks, production is shared in barrels. NNPC, acting as concessionaire, sells the government’s share and remits proceeds to the Federation Account. Any abrupt change, they argue, could complicate cost verification processes, disrupt deepwater developments, and send negative signals to investors.

Concerns also extend to crude-backed loans secured by the government, including $3.175bn obtained in 2023 using oil as collateral. Officials question how existing repayment obligations will be managed if revenue flows are redirected without clarity, warning that this could affect Nigeria’s credit standing and future capital raising efforts.

However, another NNPC official adopted a more measured tone, insisting that operations remain stable and that production, gas processing, and ongoing projects continue uninterrupted. The company, he said, is reviewing its capital allocation strategy to align with the new fiscal framework while maintaining focus on cost efficiency, gas monetisation, and long-term value optimisation.

Outside the agencies, reactions are mixed. The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) commended the President, describing the order as a bold step toward fiscal discipline, revenue transparency, and improved accountability. The association argued that centralised remittance would enhance predictable inflows into the Federation Account and strengthen macroeconomic management, while repositioning NNPC as a more commercially disciplined entity.

In contrast, labour unions have expressed alarm. The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) called for an urgent stakeholders’ meeting to clarify the directive’s scope and implications for workers’ welfare and job security. The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) rejected the order outright, warning that it threatens operational autonomy and financial stability.

Despite the controversy, implementation has reportedly begun, with revenues being channelled into designated Federation Account structures. The Minister of State for Finance and FAAC Chairman, Doris Uzoka-Anite, has directed agencies to cease deductions and off-budget retentions, citing constitutional provisions requiring all federation revenues to be paid into the Federation Account.

While state governments may benefit from increased allocations—estimated at about N14.57tn based on 2025 inflow projections—apprehension persists within regulatory and operational agencies. As attention shifts to the National Assembly, the unfolding debate is shaping into a crucial test of executive authority, statutory independence, and investor confidence in Nigeria’s oil and gas sector.