President Bola Ahmed Tinubu’s executive order halting automatic deductions of management fees and the Frontier Exploration Fund (FEF) by the Nigerian National Petroleum Company Limited (NNPCL) has effectively paused revenue streams that generated about ₦2.076 trillion between 2022 and 2025, according to an analysis of Federation Account Allocation Committee (FAAC) submissions.
The order requires all oil and gas revenues to be remitted in full to the Federation Account before any deductions, prioritising constitutional fiscal provisions over certain operational arrangements under the Petroleum Industry Act (PIA). Previously, the NNPC retained funds for management fees and frontier exploration, which fluctuated widely over four years:
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2022: ₦20.739bn
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2023: ₦695.9bn
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2024: ₦452.6bn
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2025: ₦906.91bn
These deductions significantly reduced distributable revenue to states and the federation, with monthly fluctuations ranging from sharp declines of 73% to surges above 1,200%, reflecting volatility in retained earnings.
While the directive has been welcomed by state governments and transparency advocates as a boost to fiscal accountability and distributable revenues, some industry experts warn it may conflict with statutory provisions in the PIA, particularly in deepwater production sharing contracts (PSCs).
A senior NNPC official highlighted potential operational and investment challenges, noting that:
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About 400–500 staff manage PSC operations across 39 sites, including 14 producing sites that contribute roughly 80% of output.
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Sudden redirection of revenues could disrupt operational oversight, affect obligations tied to crude-backed loans, and send negative signals to investors in frontier and deepwater projects.
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Under current PIA arrangements, royalties and taxes are remitted via crude lifting, not cash, and NNPC functions as the government’s concessionaire in commercial agreements. Changing this could create confusion and compromise fiscal and operational stability.
The Frontier Exploration Fund, initially funded through automatic deductions, was designed to support hydrocarbon exploration in frontier basins such as Chad, Sokoto, Anambra, and Benue troughs, promoting reserve growth and investment. Stakeholders have urged the government to design a transparent alternative funding mechanism for critical projects while maintaining operational efficiency and investor confidence.
The President has directed a presidential implementation committee to oversee the effective execution of the order, ensuring compliance with constitutional fiscal rules. Industry and labor groups have called for clarity to prevent disruption to production, joint venture operations, and job security.
