Signed on February 13, 2026, and announced publicly on February 18, the directive halts NNPCL’s controversial charges under the Petroleum Industry Act, promising ₦1.42 trillion in fresh inflows. Yet constitutional hurdles and arbitration risks could decide whether this reform endures or unravels.
TheDigger Intelligence Unit
What Is It?
President Bola Tinubu signed Executive Order 9 of 2026 on February 13, directing that all government entitlements from oil and gas production be paid directly into the Federation Account. He described the move as necessary to end what he called “leakage where there should be leadership.” It was publicly announced on February 18.
What Problem Was It Solving? — The PIA Deduction Architecture
Under the Petroleum Industry Act (PIA) of 2021, NNPC Limited retained:
30% of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas under Production Sharing, Profit Sharing, and Risk Service Contracts.
20% of its profits for working capital and future investments.
An additional 30% allocation to the Frontier Exploration Fund under Sections 9(4) and (5).
In plain terms, before any money reached the Federation Account — from which the Federal, State, and Local governments draw allocations — NNPCL was legally deducting 80% of oil profits for itself. Only 20 cents of every naira in profit oil went to the federation.
Since 2021, the Federation Account has received only 40% of proceeds from Production Sharing Contracts, while NNPCL has retained 60% (split between a 30% management fee and a 30% Frontier Exploration Fund).
Additionally, the Midstream and Downstream Gas Infrastructure Fund (MDGIF) under Section 52(7)(d) was funded by gas flaring penalties, further reducing inflows.
What Exactly Does EO9 Do?
The order mandates that all royalty oil, tax oil, profit oil, profit gas, and related entitlements under production sharing contracts be paid directly into the Federation Account. The 30% management fee and 30% Frontier Exploration deduction are discontinued.
EO9 suspends NNPCL’s collection of management and frontier exploration fees, halts payments of gas flare penalties into the MDGIF, and clarifies responsibilities between the Nigerian Upstream Petroleum Regulatory Commission and the Midstream and Downstream Petroleum Regulatory Authority.
It effectively cuts out NNPCL as a middleman: all entitlements must now be paid directly to fiscal authorities for remittance into the Federation Account.
Who Is Now Supervising This?
An implementation committee was established, chaired by Wale Edun, Minister of Finance and Coordinating Minister of the Economy. Members include the Attorney‑General, the Minister of Budget and National Planning, the Minister of State for Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, a representative of the Ministry of Justice, the Special Adviser to the President on Energy, and the Director‑General of the Budget Office.
What Is the Expected Impact?
The move is projected to inject over ₦1.42 trillion into the Federation Account in 2026, providing liquidity for national priorities such as security, education, and healthcare.
The Capital Market Academics of Nigeria described the reform as “bold and historic,” correcting a fiscal imbalance created by the PIA and representing “one of the most courageous reforms” of Tinubu’s administration.
What Are the Critical Risks and Unanswered Questions?
Constitutional Competence: Professor Wumi Iledare warns that while Section 5 of the Constitution empowers the President to enforce laws, altering statutory fiscal frameworks requires legislative amendment. An executive order cannot legally override an Act of the National Assembly.
PSC Contract Problem: Some deductions abolished by EO9 were embedded in Production Sharing Contracts with international oil companies. Cancelling them by fiat could expose Nigeria to arbitration claims worth billions.
Frontier Exploration Fund: While the fund risked idle balances and inefficient spending, its abolition raises questions about who will finance forthcoming exploration.
Hidden Admission: The Finance Ministry acknowledged that, despite improved production and favourable market conditions, oil and gas inflows into the Federation Account had declined, confirming that NNPCL was retaining vast sums. Where those funds went remains unanswered, and a forensic audit of NNPCL’s books from 2021–2025 is arguably imperative.
The Bottom Line
Executive Order 9 is one of Nigeria’s most significant fiscal reforms in recent history, but also one of the most legally fragile. It promises ₦1.42 trillion in new inflows by halting deductions that depleted the Federation Account, yet its authority rests on shaky constitutional ground. Without a complementary amendment to the PIA, EO9 remains an administrative directive vulnerable to reversal, legal challenge, or arbitration disputes.