President Bola Tinubu’s Executive Order mandating the direct remittance of all oil and gas revenue to the Federation Account has drawn a cautious but analytical response from energy expert Professor Emeritus Wumi Iledare, who warns that its implementation must align with existing statutory laws.
The order, issued on Wednesday, eliminates the 30 percent management fee previously retained by the Nigerian National Petroleum Company Limited (NNPCL) on oil and gas profits. It directs that royalty oil, tax oil, and profit oil be paid directly into the Federation Account, aiming to boost transparency, reduce discretionary fund retention, and strengthen statutory transfers to federal, state, and local governments.
Professor Iledare, a petroleum economist, acknowledged the policy’s intent as a “significant fiscal intervention” to improve revenue transparency at a time of severe budgetary pressure. He affirmed that safeguarding public revenues and enhancing fiscal discipline are legitimate priorities.
However, he highlighted a critical constitutional intersection. Iledare noted that the Executive Order touches on provisions of the 2021 Petroleum Industry Act (PIA), specifically statutory funds like the Frontier Exploration Fund and the Midstream and Downstream Gas Infrastructure Fund, which were established by the National Assembly. He stated that substantive changes to these legislated frameworks may require a formal amendment to ensure constitutional alignment and legal certainty.
The expert stressed the need for clear legal distinctions between contractual revenue allocations in Production Sharing Contracts (PSCs), NNPCL’s corporate retained earnings, and PIA-created earmarked funds. Conflating these, he warned, could undermine contractual stability and investor confidence.
While supporting the direct remittance goal for its transparency benefits, Iledare urged a carefully sequenced rollout. He pointed to the inherent tension in NNPCL’s dual role as both a commercial operator and a concessionaire under some agreements—a structural issue the post-PIA framework has yet to resolve fully.
To navigate these complexities, Iledare called for prompt legislative consultation to ensure statutory coherence, transparent stakeholder engagement with industry players, and clear implementation guidelines that uphold existing contractual obligations. He advocated for a balanced reform approach that marries fiscal urgency with institutional and legal stability.
The analysis underscores that while reforming Nigeria’s oil revenue management is crucial for economic stability, sustainable change must beanchored in constitutional processes and predictable governance to maintain investor trust. The path forward likely requires coordinated action between the executive and the legislature to harmonize the new directive with the PIA’s entrenched structures.
