Analysis of the Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity, 2026 (Part One)

Introduction

On 13 February 2026, His Excellency, Bola Ahmed Tinubu, GCFR, President of the Federal Republic of Nigeria, pursuant to sections 3(1), (4), and (5) of the Petroleum Industry Act 2021 (the “PIA”) and section 5 of the Constitution of the Federal Republic of Nigeria 1999, issued the Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity 2026 (the “Order”).

The Order seeks to strengthen the fiscal framework established under the PIA by eliminating certain statutory deductions that it considers inconsistent with the constitutional revenue allocation structure. In particular, it redirects revenues previously earmarked for the Frontier Exploration Fund (the “FEF”) and the Midstream and Downstream Gas Infrastructure Fund (the “MDGIF”) to the Federation Account for the benefit of all Nigerians. Its objective is to arrest the persistent decline in oil revenue inflows attributed to off-budget allocations and deductions under the PIA.

In addition, the Order aims to enhance regulatory clarity and stability within the petroleum sector by directing the Nigerian Upstream Petroleum Regulatory Commission (the “Commission”) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (the “Authority”) to establish a Joint Project Team (the “JPT”) in relation to integrated petroleum operations. The Order further sets up an Implementation Committee to oversee the effective execution of the Order.

This article explores the legal and fiscal implications of the Order which are significant for operators and other stakeholders in the Nigerian petroleum industry.

Highlights of the Order

• Effectively suspends the Nigerian National Petroleum Company Limited’s (the “NNPC”) collection and management of the 30% of profit oil and profit gas allocated to the Frontier Exploration Fund (the “FEF”), and mandates that the 30% be remitted directly to the Federation Account.
•  Further suspends, with immediate effect, the payment of 30% of profit oil and profit gas revenues to the NNPC for the management of production sharing, profit sharing, and risk service contracts, and mandates payment of these profits directly into the Federation Account.
• Directs that all profit oil and profit gas revenues received by the NNPC as concessionaire in production sharing, profit sharing, and risk service contracts, be transferred to the Federation Account.
•  Directs operators and contractors under oil and gas production sharing contracts to remit Royalty Oil, Tax Oil, Profit Oil, and Profit Gas, and any other interest due to the Government, directly into the Federation Account.
•  Directs the Commission to cease remitting gas flaring penalties into the Midstream and Downstream Gas Infrastructure Fund (the “MDGIF”) and pay these proceeds into the Federation Account. Furthermore, any expenditure from the MDGIF must be undertaken in accordance with applicable public procurement laws, regulations and policies.
•  Mandates the Commission and the Authority to constitute a Joint Project Team for technical regulation of integrated petroleum operations, with the Commission as the primary interface with licensees and lessees. The Joint Project Team, supervised by the Special Adviser to the President on Energy, is tasked with developing operational guidelines for integrated facilities, identifying the applicable licences, permits and fees, facilitating information sharing, and proposing a framework for allocating regulatory fees between the Commission and the Authority based on activity classification.
•  Establishes an Implementation Committee charged with coordinating inter-ministerial and inter-agency actions required for the implementation of the Order, monitoring institutional compliance, and providing periodic implementation updates and recommendations to the President.

Validity of the Order

The issuance of the Order raises broader constitutional issues around the scope and validity of Executive Orders in Nigeria, particularly where such orders are issued in respect of matters covered by existing statutory provisions. Executive Orders are administrative instruments through which the President gives direction to executive agencies that implement government policy. Although they derive authority from section 5 of the Constitution, they do not possess the status of primary legislation and therefore cannot ordinarily override or amend provisions of an Act of the National Assembly.

In Elephant Group Plc v. National Security Adviser & Anor, the Court of Appeal defined 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. It is indeed an effective instrument or tool for good governance and administration by the Government.”

The Order itself proceeds from the premise that the fiscal architecture created under certain provisions of the PIA has resulted in substantial petroleum revenues being diverted from the Federation Account through statutory deductions and earmarked funding arrangements. According to the Preamble of the Order, these mechanisms have contributed to declining distributable inflows to the Federation Account. The Order therefore directs that specific petroleum streams be paid into the Federation Account.

The constitutional context grounding this directive is section 162(1) of the Constitution, which provides that all revenues collected by the Government of the Federation shall be paid into the Federation Account, subject only to limited exceptions. The provision embodies a fundamental fiscal principle of constitutional order: that revenues accruing to the Federation are centrally collected and subsequently distributed among the three tiers of government in accordance with constitutionally determined allocation principles.

Considering this constitutional framework, it may be argued that certain statutory funding arrangements created under the PIA such as the FEF and the remittance of gas flaring penalties into the MDGIF, operate as statutory earmarks that redirect portions of petroleum revenues to other funds rather than the Federation Account. From this perspective, the Order may be viewed from the prism of an executive attempt to reinforce the constitutional requirement that revenues of the Federation be paid into the Federation Account.

In our jurisprudence, the supremacy of the Constitution is unassailable. Section 1(3) of the Constitution provides that where any law is inconsistent with the provisions of the Constitution, the Constitution shall prevail and the other law shall be void to the extent of the inconsistency. Public authorities are therefore bound to act in accordance with constitutional provisions even where conflicting statutory provisions remain extant. Within this framework, the Order may be viewed not as an attempt to override the PIA, but rather as an administrative directive to executive agencies to comply with the constitutional revenue framework established under section 162 of the Constitution.

However, while the Executive may validly direct its agencies to comply with constitutional provisions, Executive Orders do not legally amend or override statutes enacted by the National Assembly. Therefore, it is arguable that the relevant provisions of the PIA are unaffected by the Order and remain extant. An amendment of section 9(4), for example, and section 52(7)(d) of the PIA is the appropriate mechanism to bring the PIA into alignment with section 162 of the Constitution. A competent Court may also grant an Order declaring these provisions null and void to achieve the same effect. The Executive Order, without more, will not be sufficient.

The co-existence of these statutory provisions with the directives contained in the Order may therefore give rise to legal and operational uncertainty within the petroleum industry. Accordingly, while it may be understood that the objective of the Order is to reinforce the constitutional primacy of the Federation Account, legislative alignment between the PIA and the constitutional revenue framework would provide the clearest and most durable resolution. Such alignment would eliminate any residual uncertainty regarding the status of the affected statutory provisions and ensure coherence within Nigeria’s petroleum fiscal regime.

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