FG Orders NNPC to Stop 30% Deductions as Implementation of Tinubu’s Oil Revenue Directive Begins

The Federal Government has directed the Nigerian National Petroleum Company Limited (NNPC Ltd.) to immediately halt the collection of certain deductions from petroleum revenues, following the inaugural meeting of the implementation committee for President Bola Tinubu’s executive order on oil and gas revenue reforms.

The meeting, held on February 26, 2026, set the stage for enforcing the directive aimed at safeguarding funds accruing to the federation.

In a statement issued Monday, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, outlined key resolutions reached by the committee.

He said the panel reaffirmed the president’s instruction that all revenues from petroleum operations must be managed in accordance with constitutional principles, protect federation earnings, and strengthen fiscal stability across the federal, state, and local governments.

Immediate Halt to Key Deductions

According to the statement, NNPC Limited will cease, with immediate effect, the deduction of the 30% management fee and the 30% frontier exploration fund from profit oil and profit gas under Production Sharing Contracts (PSCs).

Additionally, remittances of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF) have been suspended in line with the executive order.

Transition to Direct Payments

Citing Section 2(3) of the order, which mandates direct payments by contractors into the Federation Account, Edun explained that the transition process would respect existing contractual and financing obligations to maintain investor confidence.

To ensure a smooth shift, the committee approved a defined transition period before full operationalisation of direct payments of profit oil, royalty oil, and tax oil into the Federation Account.

“Until detailed guidelines are issued, contractors will continue remitting under the current system,” Edun stated, adding that clear and standardised directives would soon be released to facilitate an orderly changeover.

Technical Subcommittee Established

The committee also approved the creation of a technical subcommittee to develop comprehensive transition guidelines within three weeks. The panel will simultaneously review provisions of the Petroleum Industry Act (PIA) to address structural and fiscal gaps affecting federation revenues.

The subcommittee will be chaired by the Special Adviser to the President on Energy and will include the Solicitor-General of the Federation, the Permanent Secretary of the Federal Ministry of Justice, the Chairman of the Nigeria Revenue Service, the Chairman of the Forum of Commissioners of Finance, and representatives of the Minister of State for Petroleum Resources (Oil). The Budget Office of the Federation will serve as secretariat.

Edun assured that the committee would provide coordinated guidance and regular updates as implementation progresses, commending stakeholders for supporting efforts to ensure Nigeria’s petroleum resources translate into tangible benefits for citizens nationwide.