The Nigerian Government has ordered that all oil and gas revenues be paid directly into the Federation Account, in a sweeping reform announced by President Bola Tinubu as part of efforts to strengthen public finances and curb revenue leakages. The directive, issued through an Executive Order signed in February 2026, mandates that royalties, taxes, profit oil and profit gas from production sharing contracts be remitted straight to the central revenue pool shared by federal, state and local governments, as reported by Reuters.
The order effectively reverses certain deductions previously permitted under the Petroleum Industry Act, including management fees and allocations for frontier exploration that had been retained by the Nigerian National Petroleum Company Limited. Figures and policy details published by Nairametrics indicate that operators and contractors are now required to remit royalty oil, tax oil, profit oil and profit gas directly to the Federation Account from the effective date of the order.
In addition, gas flaring penalties that were previously channelled into sector-specific funds will now be paid into the Federation Account, with any subsequent disbursement subject to existing public finance and procurement regulations. The presidency stated that the reform is designed to “restore full constitutional revenue entitlements” to all tiers of government and enhance transparency in the petroleum sector.
The move represents one of the most significant adjustments to Nigeria’s oil revenue architecture since the passage of the Petroleum Industry Act in 2021. Analysts say the reform comes amid continued budgetary pressure and a broader fiscal consolidation agenda, positioning the government to improve revenue capture, reduce off-book deductions and reinforce confidence in public financial management.
