Fresh questions, concerns, and uncertainty have emerged within Nigeria’s oil and gas agencies following President Bola Tinubu’s Executive Order directing the immediate reallocation of all oil and gas revenues to the Federation Account for onward distribution among the federal, state, and local governments.
The directive, which halts retention of internally generated revenues by agencies in the sector, has raised alarm at the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian National Petroleum Company Limited (NNPC), and the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Industry operators and experts point to the absence of an alternative funding model for these agencies as the main source of concern.
At NUPRC, senior officials highlighted that reliance on conventional budgetary allocations could compromise the commission’s operational independence and efficiency. The agency traditionally funds its operations through statutory mechanisms under the Petroleum Industry Act (PIA) 2021, including a four per cent cost of collection. This revenue underwrites staff salaries, field inspections, monitoring, and security logistics. In 2024, NUPRC spent about N88 billion on salaries and allowances, while generating approximately N322.8 billion in 2025 from the cost of collection.
Officials warn that diverting these funds to the Federation Account could weaken the commission’s ability to attract and retain highly skilled personnel, maintain competitive remuneration comparable to international oil companies, and execute its statutory mandate effectively. They also cited potential security risks, noting that underfunded operations in a sector exposed to oil theft and pipeline vandalism could increase vulnerabilities.
NNPC and Frontier Exploration Concerns
At NNPC, the order has raised questions about the management of production sharing contracts (PSC) and deepwater operations. Some 400–500 staff are dedicated to monitoring and managing PSC activities, including production oversight, cost verification, and compliance across multiple sites. Officials warn that changes to revenue channels could disrupt cash flow, operational oversight, and long-term planning, potentially affecting investor confidence in frontier and deepwater projects.
The directive also introduces uncertainty for the Frontier Exploration Services and MDGIF, as the funding framework for new crude production and gas infrastructure initiatives remains unclear. Without clarity, agencies fear disruptions to ongoing contracts, project financing, and strategic initiatives aimed at boosting crude production to three million barrels per day by 2030.
Workers’ Unions React
The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has called for urgent stakeholder engagement to clarify the Executive Order, citing concerns about employment, welfare, and the implementation of the Petroleum Industry Act. Similarly, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) rejected the order, warning that it threatens staff welfare, operational autonomy, and the financial stability of key institutions.
Support from Marketers
Conversely, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has praised the order, describing it as a decisive step toward improving fiscal discipline, transparency, and accountability in oil and gas revenue management. PETROAN noted that centralised remittance strengthens oversight, enhances budget predictability, and positions NNPC as a commercially disciplined entity.
Legal and Policy Perspectives
Experts have highlighted potential legal challenges. Professor Ayo Ayoade, a Professor of Energy Law at the University of Lagos, cautioned that executive orders cannot override Acts of the National Assembly, such as the Petroleum Industry Act. He noted the complexity of oil revenue flows, particularly in PSCs where royalties and taxes are remitted in crude, not cash, and where NNPC plays a key role as concessionaire.
Meanwhile, Zacch Adedeji, Executive Chairman of the Nigeria Revenue Service (NRS), defended the reforms as a move to eliminate “cost of collection” practices and improve transparency. He emphasised that regulatory agencies should focus on their statutory mandates rather than revenue retention, comparing the process to funding law enforcement agencies that do not generate income but are funded by the government.
Expert Warnings
Economists and industry observers have stressed the need for careful management of the transition, warning that diverting funding streams could slow decision-making, paralyse critical operations, and undermine investor confidence. They argue that seamless and structured implementation is essential to safeguard contractual obligations, regulatory oversight, and operational continuity.
Looking Ahead
As implementation begins, attention is shifting to the National Assembly, where agencies like NUPRC are expected to present their concerns. Broad stakeholder engagement, clear alternative funding mechanisms, and alignment with the PIA will be critical to ensuring policy reforms strengthen fiscal governance without destabilising Nigeria’s oil and gas sector.
