14 May 2026
A Review of Executive Order No. 9 and Its Effect on the Petroleum Industry Act
Introduction
On 13 February 2026, five years after the enactment of the Petroleum Industry Act 2021 (PIA), President Bola Ahmed Tinubu signed Executive Order No. 9 of 2026, formally titled the "Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity, 2026" (the Order). The Order was issued in pursuance of sections 5 and 44(3) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) and has since been gazetted.
The stated rationale for the Order is that the current PIA framework created structural and legal channels through which substantial Federation revenues are lost through deductions, sundry charges, and fees. In the view of the Federal Government, these deductions collectively divert more than two-thirds of potential remittances to the Federation Account. The Order therefore seeks to restructure the flow of petroleum revenues, reinforce financial transparency, eliminate duplicative retention structures, and reposition NNPC Limited strictly as a commercial enterprise.
This article examines the principal directives of Executive Order No. 9, their interaction with specific provisions of the PIA, and the constitutional questions they raise.
Provisions of Executive Order No. 9 and Their Interaction with the PIA
The Order introduces directives regarding three distinct revenue and fund structures established under the PIA: the management fee retained by NNPC Limited on profit oil and profit gas; the Frontier Exploration Fund; and the Midstream and Downstream Gas Infrastructure Fund. Each is examined in turn.
1. The Management Fee
Under section 64 of the PIA, NNPC Limited retains 30 per cent of oil revenues derived from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts as a management fee on Profit Oil and Profit Gas. In addition, NNPC Limited retains 20 per cent of its profits to cover working capital and future investments.
The Federal Government's position, as set out in the Order, is that this additional 30 per cent management fee is unjustified, given that the 20 per cent retained earnings are already sufficient to support the functions NNPC Limited performs under these contracts. The Order accordingly directs that all government entitlements, including Royalty Oil, Tax Oil, Profit Oil, and Profit Gas, be paid directly into the Federation Account, with NNPC Limited no longer entitled to deduct the 30 per cent management fee from those revenues.
Beyond the fiscal concern, the Order also identifies a structural issue: NNPC Limited's continued role as a concessionaire under Production Sharing Contract arrangements allows the company to influence operating costs while simultaneously functioning as a commercial entity. In the Federal Government's assessment, this creates potential competitive distortions and undermines NNPC Limited's transition into a fully commercial operator as envisioned under the PIA. The Order accordingly introduces measures to curb revenue leakage and reposition NNPC Limited within a strictly commercial framework.
2. The Frontier Exploration Fund
Sections 9(4) and (5) of the PIA establish the Frontier Exploration Fund (FEF), which is funded by 30 per cent of NNPC Limited's profit oil and profit gas from production-sharing, profit-sharing, and risk-service contracts. The FEF was designed as a dedicated mechanism to support oil and gas exploration in Nigeria's frontier basins.
The Executive Order directs that NNPC Limited shall no longer collect and manage this 30 per cent allocation. Instead, the profit oil and profit gas currently earmarked for the FEF under sections 9(4) and (5) shall henceforth be transferred directly to the Federation Account. The Order's reasoning is that a fund of that magnitude, devoted to speculative exploration, risks accumulating large idle cash balances and encouraging inefficient exploration spending at a time when government resources are urgently needed for core national priorities, including security, education, healthcare, and energy transition investments.
It is worth noting that the Order does not abolish frontier exploration as a national objective; it redirects the revenue stream so that the allocation decision passes through the Federation Account and, by implication, through the ordinary appropriation process, rather than being retained by NNPC Limited as a standing deduction.
3. The Midstream and Downstream Gas Infrastructure Fund
Section 52(7)(d) of the PIA provides for the Midstream and Downstream Gas Infrastructure Fund (MDGIF), funded by gas flaring penalties collected pursuant to section 104 of the Act. The Fund was established to support environmental remediation and provide relief for host communities impacted by gas flaring.[1]
Under the Order, President Tinubu suspended payments of gas flaring penalties into the MDGIF. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is directed, from the date of the Order, to pay all proceeds from penalties imposed on operators for gas flaring directly into the Federation Account.
The Order grounds this directive in section 103 of the PIA, which establishes a dedicated Environmental Remediation Fund administered by the NUPRC. The Federal Government's position is that this fund already serves the wider purpose of rehabilitating communities negatively impacted by upstream petroleum operations, including gas flaring, rendering the separate MDGIF duplicative.
Additional Measures Under the Order
Beyond the three fund-specific directives, the Order introduces two further structural measures.
First, the Order approves the constitution of a joint project team to execute integrated petroleum operations, with the NUPRC serving as the interface with licensees and lessees in respect of integrated operations where upstream and midstream petroleum operations are fully combined. This addresses the fragmented oversight identified within the current PIA architecture.
Second, President Tinubu approved the establishment of an Implementation Committee to oversee the coordinated implementation of the Order. The Committee comprises the Minister of Finance and Coordinating Minister of the Economy, the Attorney-General of the Federation and Minister of Justice, the Minister of Budget and National Planning, and the Minister of State for Petroleum Resources (Oil), among others. The Director-General of the Budget Office of the Federation will provide the Committee with a secretariat.
Notably, the President also announced that his administration will undertake a comprehensive review of the PIA in consultation with relevant stakeholders to address identified fiscal and structural anomalies. This signals that the Order is intended as an interim measure pending deeper legislative reform, rather than a permanent resolution of the tensions it seeks to address.
Constitutional Basis and Validity
Executive Order No. 9 is expressed to have been made pursuant to sections 5 and 44(3) of the Constitution. Section 5 vests executive authority in the President and authorises its exercise, directly or through subordinate officers. Section 44(3) vests ownership, control, and derivative rights in all minerals, mineral oils, and natural gas in the Federal Government, to be managed in such manner as the National Assembly may prescribe.
The reliance on section 44(3) grounds the Order in the Federal Government's constitutional ownership of petroleum resources. However, section 44(3) also makes clear that the management framework for those resources is to be prescribed by the National Assembly, which, in the case of the petroleum sector, is the PIA. This creates an inherent constitutional tension: while the Federal Government owns petroleum resources, the architecture for managing them, including the retention structures and fund mechanisms now targeted by the Order, was established by statute.
Where executive action seeks to modify, suspend, or redirect statutory funding mechanisms established by the National Assembly, questions of separation of powers arise. Executive orders derive their legitimacy from their consistency with the Constitution and existing legislation; they cannot, as a rule, override or suspend express statutory provisions without National Assembly authorisation. To the extent that Executive Order No. 9 reinforces remittance discipline and transparency in a manner consistent with the PIA, it is likely to be regarded as a lawful exercise of executive authority. However, where its directives effectively suspend or alter funding allocations and retention structures expressly created by statute, the Order may be vulnerable to constitutional challenge.
The announced comprehensive review of the PIA suggests that the executive is aware that legislative amendment, rather than executive direction alone, is the more sustainable path to resolving these structural tensions.
Written by Khadijat Akewushola and Linda Shaljaba