President Bola Tinubu has signed an Executive Order (EO) that directs the Nigerian National Petroleum Company Limited (NNPCL) to remit 30 percent Frontier Exploration Fund to the Federal Government of Nigeria.
According to the presidential spokesperson, Bayo Onanuga, President Tinubu signed the EO in accordance with Section 5 of the Constitution of the Federal Republic of Nigeria (as amended).
The Executive Order is based on Section 44(3) of the Constitution, which vests the ownership, control, and derivative rights in all minerals, mineral oils, and natural gas in, under, and upon any land in Nigeria—including its territorial waters and Exclusive Economic Zone—in the Government of the Federation.
This development aims to restore the constitutional revenue entitlements of the federal, state, and local governments, which were removed in 2021 by the Petroleum Industry Act (PIA).
NNPCL retains 30 percent of the Federation’s oil revenues as a management fee on profit oil and profit gas derived from production sharing contracts, profit sharing contracts, and risk service contracts under the current PIA.
The company also retains 20 percent of its profits to cover working capital and future investments, which the government considers enough to support the functions NNPCL performs under these contracts.
The EO seeks to remove overlapping and redundant provisions in the PIA and to also ensure that revenues allocated for the Federation Account are preserved so that the three tiers of government can focus on critical national priorities.
President Tinubu also disclosed the in-depth review of the PIA in consultation with key stakeholders to address other fiscal and structural anomalies.
An Implementation Committee has been set up to coordinate the effective execution of the EO.
Committee members include 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, the Minister of State Petroleum Resources (Oil), the Chairman of the Nigeria Revenue Service, a representative of the Ministry of Justice, the Special Adviser to the President on Energy, and the Director-General of the Budget Office of the Federation, who will provide a secretariat to the committee.
More details later.