Nigeria received full remittances of profit from its Production Sharing Contracts (PSCs) in February, marking the first month of implementation of President Bola Tinubu’s Executive Order 9 on oil revenue remittances.
Data presented to the Federation Account Allocation Committee by the Nigerian National Petroleum Company Limited (NNPC Ltd.) showed that the federation received the entire PSC profit for February. This contrasts sharply with previous months, when only about 40 percent of PSC profits were remitted to the federation account.
According to the report, NNPC remitted 121.34 billion naira ($150 million) to FAAC as PSC revenue in February, a more than 100 percent increase from the 16.07 billion naira recorded in January. The year-to-date remittance for PSC profits now stands at 137.41 billion naira.
The development follows the signing of Executive Order 9 on February 18, which requires that all government oil revenues — including royalty oil, tax oil, profit oil, profit gas and other payments under production-sharing, profit-sharing, and risk-service contracts — be paid directly into the federation account.
The order also abolished the 30 percent Frontier Exploration Fund established under the Petroleum Industry Act (PIA) and ended the 30 percent management fee on profit oil and gas previously retained by NNPC. The directive effectively terminates NNPC’s authority to deduct oil and gas revenues before remittance to the federation account.
While the executive order has been welcomed by some experts as a move to safeguard public revenues, it has faced criticism. Analysts argue that it may conflict with provisions of the PIA enacted under former President Muhammadu Buhari, and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) described the directive as a dangerous precedent that could weaken investor confidence in the sector. The presidency defended the measure, calling it a constitutional tool to protect public funds rather than an attempt to bypass the National Assembly.
Despite the increase in February, total remittances remain below budget expectations. FAAC data shows that 394.73 billion naira in PSC revenue was projected for the first two months of 2026, leaving an actual shortfall of roughly 257.32 billion naira.
Similarly, the federation did not receive any interim dividend from NNPC between January and February. While 542.37 billion naira was budgeted as dividend payments for the two-month period, no remittance was recorded.
As a result, total oil and gas revenues fell sharply short of projections. Budgeted revenue for January and February was 937.10 billion naira, while actual inflows amounted to 137.41 billion naira, leaving a variance of about 799.69 billion naira.
The implementation of Executive Order 9 represents a major policy shift in Nigeria’s oil revenue management and signals closer government oversight of petroleum earnings intended to bolster fiscal accountability and transparency.
Nigeria relies heavily on oil and gas revenues, which contribute a significant portion of government earnings and foreign exchange inflows. Most upstream petroleum projects in the country operate under Production Sharing Contracts (PSCs), agreements between the government and oil companies that specify how costs and profits are divided. Under these contracts, a portion of revenue is usually retained by the state-owned Nigerian National Petroleum Company Limited (NNPC Ltd.) to cover operational costs before remitting profits to the Federation Account Allocation Committee, which distributes funds to federal, state, and local governments.
The management of oil revenue in Nigeria is governed by the Petroleum Industry Act (PIA), enacted in 2021, which introduced new frameworks for royalty, profit oil, frontier exploration, and management fees. The law also sought to attract investment while ensuring the government receives a fair share of petroleum earnings.
Historically, only part of PSC profits was remitted to the federation account, with deductions made for operational expenses and management fees retained by NNPC. Critics argued that this system limited transparency and slowed the flow of funds to government coffers.
In February 2026, President Bola Tinubu signed Executive Order 9 to streamline revenue flows, mandating that all government oil revenues, including royalties, profit oil, and other payments under PSCs and related contracts, be paid directly into the federation account. The order also abolished the 30 percent Frontier Exploration Fund and ended management fees on profit oil and gas, effectively preventing NNPC from deducting funds before remittance.
The executive order has generated debate among analysts, investors, and labor unions. Supporters view it as a constitutional measure to safeguard public revenues, while critics argue it could contravene provisions of the PIA and undermine investor confidence in Nigeria’s petroleum sector.
The move comes amid ongoing efforts to improve fiscal transparency, strengthen government oversight of natural resources, and enhance revenue distribution to states and local governments. It also highlights broader challenges in Nigeria’s oil-dependent economy, including volatility in global oil prices, shortfalls in projected revenue, and the need to balance investment incentives with fiscal accountability.
