INTRODUCTION
President Bola Ahmed Tinubu signed Executive Order No. 9 of 2026 on 13 February 2026, directing the realignment of the remittance framework for three major revenue streams embedded in the Petroleum Industry Act (PIA) 2021: (i) the 30% Frontier Exploration Fund (FEF) allocation; (ii) the 30% management fee payable to NNPC Limited on profit oil and gas; and (iii) the Gas Flare Penalty payments into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). The Order also mandates the establishment of a Joint Project Team for integrated petroleum operations. This update analyses the Order’s key provisions, the critical question of its constitutional competence to override the PIA, and the implications for investors in the Nigerian oil and gas sector.
- BACKGROUND AND CONTEXT
The Petroleum Industry Act 2021 (PIA) was enacted after nearly two decades of legislative effort to restructure Nigeria’s petroleum sector. Among its fiscal architecture, the PIA introduced several funds and fees that are now directly at issue:
The Frontier Exploration Fund (FEF) was established under Section 9 of the PIA, which allocates 30% of profit oil and profit gas from production sharing, profit sharing, and risk service contracts to the FEF. The fund is managed by the Nigerian Upstream Petroleum Regulatory Commission (the Commission) and is dedicated to financing exploration in Nigeria’s frontier and inland basins.
The 30% Management Fee to NNPC Limited entitles NNPC Limited to a management fee of 30% on profit oil and profit gas revenues accruing to the Federation from Production Sharing Contracts (PSCs), Profit Sharing Contracts, and Risk Service Contracts. This fee was designed as compensation for NNPC Limited’s role in managing those contracts on behalf of the Federal Government.
The Midstream and Downstream Gas Infrastructure Fund (MDGIF) receives proceeds from gas flare penalties imposed on operators by the Commission. Under the PIA, these proceeds are dedicated to financing midstream and downstream gas infrastructure development across Nigeria, rather than flowing into the general Federation Account.
The Order states that the above deductions have created ‘opaque and structural channels through which substantial revenues of the Federation are diverted away from the Federation Account’, and that more than two-thirds of potential remittances are effectively being withheld from the Federation Account. The President argues these deductions are constitutionally inconsistent with sections of the 1999 Constitution requiring all oil and gas revenues to accrue to the Federation Account for distribution to Federal, State, and Local Governments.
- KEY PROVISIONS OF THE ORDER
2.1 Suspension of the Frontier Exploration Fund
- NNPC Limited shall immediately suspend collection and management of the 30% profit oil and gas allocated to FEF.
- The 30% profit oil and gas from petroleum sharing contracts, profit sharing, and risk service contracts currently earmarked for the FEF shall henceforth be transferred directly to the Federation Account.
2.2 Suspension of the 30% Management Fee to NNPC Limited
- The 30% management fee previously payable to NNPC Limited on profit oil and profit gas is suspended with immediate effect.
- NNPC Limited shall transfer all profit oil and profit gas it receives as concessionaire or government representative directly to the Federation Account.
- All operators and contractors under production sharing contracts are directed to pay Royalty Oil, Tax Oil, and Profit Oil, Profit Gas and all other government interests directly into the Federation Account.
2.3 Suspension of Gas Flare Penalty into MDGIF
- Gas flare penalty proceeds shall be paid into the Federation Account rather than the MDGIF, with effect from the date of the Order.
- Expenditure from the existing MDGIF balance shall henceforth be conducted in accordance with public procurement laws, policies, and regulations.
2.4 Joint Project Team for Integrated Operations
- The Commission (NUPRC) shall serve as the primary interface with licensees and lessees on integrated operations where upstream and midstream activities are fully combined.
- The Commission and the Midstream and Downstream Petroleum Regulatory Authority (MDPRA) shall, within two weeks, constitute a Joint Project Team (JPT) for technical regulation of integrated operations.
- The JPT’s mandate includes developing operational guidelines for integrated facilities; identifying applicable licences and fees; facilitating data sharing; and proposing a framework for fee allocation between the Commission and the Authority.
- The Special Adviser to the President on Energy shall oversee the JPT’s work.
2.5 Implementation Committee
An Implementation Committee comprising the Minister of Finance and Coordinating Minister of the Economy, Attorney General of the Federation, Minister of Budget and National Planning, and Minister of State Petroleum Resources (Oil, the Chairman of the Nigeria Revenue Service, the Special Adviser on Energy; and the Director-General of the Budget Office, shall coordinate and monitor compliance with the Order and report periodically to the President.
- Subsequent Implementation Clarifications (Published 3 March 2026)
Following the inaugural meeting of the Implementation Committee held on 26 February 2026, and subsequent official statements released on 2 March 2026, the Federal Government has revised its approach to the operationalisation of the Executive Order.
It has been publicly reported and affirmed by the Minister of Finance and Coordinating Minister of the Economy that the Federal Government does not intend to eliminate Nigerian National Petroleum Company Limited’s (NNPC Limited) functional role in lifting and commercializing crude oil. Instead, the implementation framework is expected to transition toward a model where revenues derived from such lifting are paid into a designated Central Bank of Nigeria (CBN) account prior to final remittance into the Federation Account.
The revised Executive Order introduced the following:
- Account Custody and Control: A dedicated transition account has been created and is domiciled at the CBN. The account will be supervised by the Office of the Accountant-General of the Federation (OAGF) rather than petroleum regulatory agencies. This ensures that the funds remain within the control of the Federation.
- NNPC Limited’s Role as Agent: While NNPC Limited no longer retains the 30% management fee, it maintains a functional role in the remittance chain. This is because royalties and taxes are often settled in “barrels” of crude oil rather than liquid cash therefore NNPC Limited will continue to lift and commercialize these barrels and the proceeds will be deposited in the transition account.
- Access Restrictions: NNPC Limited is expressly restricted from accessing the funds once they are paid into the CBN account. Unlike the previous framework where NNPC Limited could deduct costs “at source,” the new directive mandates a 100% remittance. NNPC Limited must now rely on budgetary appropriations or approved refunds from the Federal Government to cover its operational costs, effectively separating the “commercialization” role from “revenue retention.”
- The 90-Day Transition Window: To preserve investor confidence and existing Production Sharing Contracts (PSCs), the Implementation Committee has approved a transition period. During this window, a Technical Subcommittee led by the Special Adviser to the President on Energy is developing the final standardized guidelines for how operators will interface with this new CBN account. In the meantime, the Committee has clarified that the CBN shall act as the primary custodian of these redirected flows during the 90-day transition window to ensure zero disruption to upstream liquidity.
- Our Thoughts on the Legality or Otherwise of the Executive Order
Under the 1999 Constitution of the Federal Republic of Nigeria (as amended), (the “Constitution”) section 4 vests legislative powers in the National Assembly at the federal level. The National Assembly enacts laws, including the Petroleum Industry Act (PIA), through the constitutionally prescribed process of bill introduction, readings, and presidential assent. Once enacted, an Act of the National Assembly has the force of federal law and binds all persons and authorities throughout Nigeria.
Black’s Law Dictionary defines an Executive Order as a directive issued by or on behalf of the President, intended to direct the actions of executive agencies or government officials or to set policies for the executive branch. Nigerian courts have similarly described an executive order as an order or regulation issued by the President or some administrative authority under his direction for the purpose of interpreting, implementing, or giving administrative effect to a provision of the constitution or of some or treaty.
The constitutional basis sometimes relied upon to justify executive law-making is section 315(2) of the Constitution, which empowers the President or a Governor to modify existing laws to bring them into conformity with the Constitution by order. However, this power is limited and does not extend to amending or suspending validly enacted legislation.
Where an Executive Order purports to alter, suspend, or modify the operation of an Act of the National Assembly, it may raise concerns under the doctrine of separation of powers, which is firmly embedded in the Constitution. This principle was affirmed in A.G. Abia State & Ors v A.G. Federation (2022) LCN/4988 (SC), where the Supreme Court held that Executive Order No. 10 of 2020, issued by President Muhammadu Buhari, was unconstitutional because it sought to alter section 121 of the Constitution relating to state judiciary funding.
While there is a compelling argument that the suspension of the Frontier Exploration Fund (FEF), the Management fee and the Gas Flare Penalty into MDGIF may be ultra vires to the President’s statutory powers given that these funds are expressly provided for under the PIA, the more fundamental question is, can an executive order validly suspend or vary a statutory entitlement expressly granted by an Act of the National Assembly, particularly where the beneficiary is a separate corporate entity not directly subject to direct executive control?
The executive order which relies on section 3(1), (4), and (5) of the PIA, vests in the President, in his capacity as Minister of Petroleum Resources, supervisory authority over the petroleum industry, including the power to issue general policy directives to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). However, this supervisory authority appears limited to policy direction and does not extend to varying statutory entitlements created by the PIA and does not extend to control over NNPC Limited.
NNPC Limited is established under the PIA as a corporate entity distinct from the Government, consistent with the doctrine of corporate personality established in Salomon v Salomon. Section 64(a) of the PIA provides that NNPC Limited shall operate on a commercial basis comparable to private companies in Nigeria and is exempt from the Public Procurement Act, the Fiscal Responsibility Act, and the Treasury Single Account framework. Section 64(8) further provides that NNPC Limited is entitled to remit proceeds of profit oil and profit gas to the Federation, less its 30% management fee and the FEF as provided under section 9(4) of the Act.
The legislative intention behind incorporating NNPC limited as a private company was to guarantee commercially independent as the national oil company for Nigeria similar to the Saudi Aramco, the national oil company of Saudi Arabia. However, by suspending the management fee through an executive order, the President arguably compels NNPC Limited to perform the functions outlined in section 64 of the PIA without compensation. The management fee, as characterized by the statute constitutes consideration for the performance of those functions. As such, it constitutes a right arising directly from statute and carries a contractual and commercial character consistent with the corporate structure of NNPC Limited.
Moreover, it has been argued that if NNPC’s gross accruals are fully remitted to the Federal Government, the fiscal architecture effectively shifts back toward the pre- PIA framework. In that scenario, NNPC’s operational and funding obligations would revert to being treated as budgetary appropriations, with cash calls similarly classified as direct fiscal expenditures.
While the policy intention behind the Executive Order may be plausible and would enhance transparency for the government particularly in light of the recent audits which has exposed significant unexplained expenditures at NNPC Limited, the action of the President may raise a significant business concern of regulatory predictability. The PIA was enacted to provide long-awaited fiscal and governance stability. However, if statutory fiscal provisions can be suspended by executive directives, investors may seek enhanced contractual protections when investing in Nigeria, which ultimately shapes international perception of Nigeria as a place to make viable investments.
The subsequent adjustment of the remittance mechanism suggests that the Federal Government is responsive to operational realities, as the former mechanism of direct transfer to the Federation account would have proven difficult to implement given that the profit oil and cost oil are not remitted in cash.
In the short term, the Executive Order will likely improve the Federation’s liquidity. However, its ultimate impact will depend on efficient and transparent government spending, legislative response, judicial interpretation of the validity of such executive action, and how effectively regulatory certainty can be restored.
Ozioma Agu is a Partner at Stren & Blan Partners and supervises the Firm’s Energy, Finance and Infrastructure Sector. Anjoreoluwa Boluwajoko, David Olajide, Justice Theophilus and Eniola Alayo are Associates in the Firm’s Energy, Finance and Infrastructure Sector.
Stren & Blan Partners is a full-service commercial Law Firm that provides legal services to diverse local and international Clientele. The Business Counsel is a weekly column by Stren & Blan Partners that provides thought leadership insight on business and legal matters.
Connect with Stren & Blan Partners:
Website: www.strenandblan.com
LinkedIn: linkedin.com/company/strenandblan
Twitter: twitter.com/Strenandblan
