By Yusuf Danjuma Yunusa

In a decisive move to enhance transparency and curb revenue leakages in the petroleum sector, the Nigerian Government has approved a transition period for oil companies to begin remitting revenues directly into the Federation Account. This directive is a core component of Executive Order 9, recently signed by President Bola Ahmed Tinubu.

The decision was formalized during the inaugural meeting of the Implementation Committee on Executive Order 9, held on February 26, 2026.

In a statement released on Monday, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, who chairs the committee, announced the approval of a transition arrangement. He emphasized that this measured approach is designed to prevent any disruption to existing contractual and financing obligations within the oil industry.

The policy’s primary objective is to mandate the direct payment of all revenues from petroleum operations—including profit oil, royalty oil, and tax oil—into the Federation Account. This measure is intended to strengthen public finance management and ensure a more equitable distribution of resources across all three tiers of government (federal, state, and local).

Minister Edun explained that while the government is committed to enforcing the new payment structure, the committee agreed that a cautious implementation is vital to preserving investor confidence.

“With respect to Section 2, Sub-section 3 of Executive Order 9 on direct payments by contractors into the Federation Account, the Implementation Committee agreed that this transition must be implemented in a manner that respects existing contractual and financing arrangements and maintains investor confidence,” he stated.

He further clarified that a defined transition period has been approved before the new remittance system becomes fully operational. Until detailed guidelines are released by the committee, existing payment processes will remain in place.

“Until the Committee issues detailed guidelines, contractors will continue to remit under the current process. During the transition period, the Committee will issue clear, standardised guidance to ensure an orderly changeover,” Mr. Edun added.

To operationalize the directive, the committee has established a technical subcommittee tasked with developing a comprehensive implementation framework within three weeks. This subcommittee will also conduct a review of the Petroleum Industry Act (PIA) to identify structural and fiscal provisions that may be weakening government revenues from petroleum operations.

“The Technical Subcommittee will develop the detailed guidelines for the transition to direct remittance within three weeks and commence a review of the Petroleum Industry Act to address structural and fiscal anomalies that weaken Federation revenues,” Mr. Edun said.

The panel will be chaired by the Special Adviser to the President on Energy, Mrs. Olu Verheijen. Its members include senior officials from the Office of the Solicitor-General of the Federation, the Federal Ministry of Justice, the Nigeria Revenue Service, 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 its secretariat.

As an immediate part of the reforms under Executive Order 9, the government has directed NNPC Limited to halt certain deductions under Production Sharing Contracts.

According to the committee, NNPC Limited is to immediately stop collecting a 30 per cent management fee and a 30 per cent frontier exploration fund deduction from profit oil and profit gas. Furthermore, the remittance of all gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund has been suspended with immediate effect.

The implementation committee reaffirmed that these sweeping reforms are designed to guarantee that all revenues generated from Nigeria’s oil and gas resources are fully accounted for and paid into the Federation Account, in strict adherence to constitutional provisions.

“The Committee reaffirmed the President’s directive that revenues accruing to the Federation from petroleum operations must be handled in a manner that upholds constitutional principles, protects revenues accruable to the Federation and supports the fiscal stability of all three tiers of government,” the statement concluded.