OAL Hails Tinubu’s Executive Order on Direct Oil Revenue Remittance, Urges NNPC Privatisation and Phase-Out of JV/PSC Regime

 

By oluwaseyi fadoro 

 The Oil and Gas policy advocacy group OAL has commended President Bola Ahmed Tinubu for signing the Executive Order mandating the direct remittance of oil and gas revenues to the Federation Account, describing the move as a decisive step toward reclaiming Nigeria’s fiscal sovereignty.

In a formal submission to the Implementation Committee chaired by the Honourable Minister, OAL, through its Principal Partner, Olisa Agbakoba, said the directive represents a “pivotal moment” in Nigeria’s fiscal governance and validates years of sustained advocacy for reforms in the petroleum sector.

Agbakoba explained that the Executive Order mandates that revenues including Royalty Oil, Tax Oil, Profit Oil, and Profit Gas be paid directly into the Federation Account in line with Section 162 of the 1999 Constitution (as amended). The Order also eliminates management fees on Profit Oil and Profit Gas, redirects proceeds from the Frontier Exploration Fund to the Federation Account, and suspends gas flare penalty payments into designated industry funds.

He said the directive addresses longstanding concerns over revenue leakages under the Petroleum Industry Act (PIA), arguing that Nigeria’s sovereignty over its oil and gas resources had been weakened by layers of deductions and structural arrangements involving NNPC Limited and multinational oil companies.

For years, the group stated, remittances to the Federation Account were undermined by governance structures that allowed the national oil company to operate both as a commercial entity and concessionaire — a dual role OAL described as a structural conflict that eroded constitutionally mandated revenues due to the federal, state, and local governments.

“The Executive Order is a commendable exercise in vindicating the constitutional intent of Section 162,” OAL stated, noting that the provision requires that all revenues of the Federation be paid directly into the Federation Account.

While applauding the President’s action as “revolutionary,” Agbakoba argued that the Order does not go far enough.

He identified two major gaps that must be addressed during implementation and in the broader review of the PIA.

First, OAL called for the privatisation of NNPC Limited, insisting that government should exit commercial participation in oil and gas operations entirely.

“Nigeria does not need a state oil company,” Agbakoba said, arguing that the country has a sufficiently robust private sector capable of driving exploration and production. According to him, NNPC has historically absorbed between 50 and 70 percent of oil and gas public revenue through various statutory and structural mechanisms.

OAL recommended that the Implementation Committee formally propose the privatisation or sale of NNPC Limited as part of its reform framework.

Secondly, OAL said the Executive Order’s provision requiring operators under Production Sharing Contracts (PSCs) to pay government entitlements directly into the Federation Account — effective February 13, 2026 — merely changes the payment channel without altering the underlying contractual structures.

Agbakoba argued that Joint Venture (JV) and PSC arrangements with international oil companies (IOCs) allow cost recovery mechanisms and profit-sharing terms that significantly reduce net revenues accruing to the Federation.

Under existing PSC frameworks, he noted, companies recover costs before calculating government profit shares — a structure he claimed incentivises cost inflation and revenue suppression.

To address this, OAL proposed a phased withdrawal from all JV and PSC arrangements over a structured transition period.

He said such an approach would respect Nigeria’s international treaty obligations and investor expectations while gradually restoring full sovereign control over petroleum resources. A legislatively backed transition plan, he added, would mitigate risks of arbitration claims and investor flight.

OAL linked Nigeria’s fiscal challenges — including debt sustainability pressures, revenue shortfalls, and constrained public investment in critical sectors — to declining oil and gas remittances under the current framework.

Agbakoba said the Executive Order has the potential to unlock substantial incremental revenue for the Federation, strengthen public service delivery across the three tiers of government, and restore investor confidence through improved transparency and accountability.

He expressed readiness to provide technical support and institutional expertise to the Implementation Committee as it undertakes the comprehensive review of the PIA and operationalises the Executive Order.

“This is a historic opportunity to align Nigeria’s petroleum governance framework with constitutional principles and national economic interests,” he said.