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Tinubu’s Executive Order: FG, states, LGs allocation may increase by N15tn

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The federal, state, and local governments may receive additional revenue allocation of about N14.57tn following the recent Executive Order signed by President Bola Tinubu, directing that royalty oil, tax oil, profit oil, profit gas, and other revenues due to the Federation under production sharing, profit sharing, and risk service contracts be paid directly into the Federation Account

This is based on an analysis of revenue inflows in 2025, drawing on monthly earnings submitted to the Federation Account Allocation Committee and obtained by our correspondent in Abuja on Thursday.

Based on estimates from 2025 remittances to the Federation Allocation Accounts Committee, the Nigerian National Petroleum Company is projected remit about N906.91bn in management fees and frontier exploration funds, while oil and gas royalties totalling N7.55tn and gas flaring penalties of N611.42bn collected by the Nigerian Upstream Petroleum Regulatory Commission will now be remitted directly to the Federation Account.

The Nigeria Revenue Service will also lose the authority to collect Petroleum Profits Tax and Hydrocarbon Tax, which generated N4.905tn in 2025, while the Midstream and Downstream Gas Infrastructure Fund recorded N596.61bn in the same period, bringing the total affected revenue streams to about N14.57tn.

It was reported on Wednesday that the President signed the executive order directing that royalty oil, tax oil, profit oil, profit gas, and other revenues due to the Federation under production sharing, profit sharing, and risk service contracts be paid directly into the Federation Account.

The order also scrapped the 30 per cent Frontier Exploration Fund under the PIA and stopped the 30 per cent management fee on profit oil and profit gas retained by the Nigerian National Petroleum Company Limited. The order, which took effect from February 13, 2026, is aimed at safeguarding oil and gas revenues due to the Federation and improving remittances into the Federation Account.

According to details of the directive, the President invoked Section 5 of the Constitution of the Federal Republic of Nigeria (as amended), while the policy was anchored on Section 44(3), which vests ownership and control of all minerals, mineral oils, and natural gas in the Government of the Federation.

The PUNCH also gathered exclusively that the implementation of the directive commenced in January, and its impact is expected to reflect in the revenue allocations at the FAAC meeting scheduled for next week.

Since the implementation of the PIA in 2021, the Federation Account, shared by the federal, state, and local governments, received only 40 per cent of proceeds from Production Sharing Contracts. The remaining 60 per cent was retained by the NNPC, split between a 30 per cent Frontier Exploration Fund and a 30 per cent management fee.

Under the new directive, NNPC will no longer collect and manage the statutory 30 per cent Frontier Exploration Fund, a development expected to significantly alter the revenue landscape of the oil and gas sector.

The frontier exploration fund is designed to finance hydrocarbon exploration activities in Nigeria’s frontier basins, areas outside the traditional Niger Delta producing belt, where commercial discoveries have yet to be fully established. These include: the Chad Basin in the North-East, the Sokoto Basin in the North-West, the Bida Basin in North-Central Nigeria, the Benue Trough, and parts of the Dahomey basin.

Exploration in these locations is aimed at expanding Nigeria’s reserve base, reducing regional concentration of oil production, and enhancing long-term energy security. Activities typically involve seismic data acquisition, exploratory drilling, geological studies, and appraisal campaigns.

The fund was floated under the Petroleum Industry Act because frontier basins are generally high-risk and capital-intensive, and therefore would require sustained funding considered critical to maintaining exploration momentum.

In addition, the national oil company will no longer be entitled to the 30 per cent management fee on profit oil and profit gas revenues. The order further directed that all operators and contractors of oil and gas assets under Production Sharing Contracts must now pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other government interest directly into the Federation Account.

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The directive also suspended payments of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund, instructing the Nigerian Upstream Petroleum Regulatory Commission to remit all proceeds from penalties imposed on operators directly into the Federation Account.

It further directed that all expenditure from the Midstream and Downstream Gas Infrastructure Fund must now comply with extant public procurement laws and regulations. Tinubu said excessive deductions, overlapping funds, and structural distortions in the oil and gas sector have weakened remittances to the Federation Account, warning that the practice must end to protect national revenue.

In a post on his verified X handle, the President stated that for too long, revenues meant for federal, state, and local governments had been trapped in layers of charges and retention mechanisms, thereby slowing development across the country.

He said, “For too long, excessive deductions, overlapping funds, and structural distortions in the oil and gas sector have weakened remittances to the Federation Account. When revenues meant for federal, state, and local governments are trapped in layers of charges and retention mechanisms, development suffers. That must end.”

Tinubu emphasised that oil and gas revenues must serve Nigerians first, noting that the ongoing reforms in the sector are aimed at promoting fairness and fiscal responsibility. He added, “Oil and gas revenues must serve the Nigerian people first, and this reform is about fairness and fiscal responsibility.”

The President explained that as the government strengthens national security, invests in education, expands healthcare, stabilises the economy, and advances the country’s energy transition, every legitimate revenue due to the Federation must be protected.

According to him, NNPC will now operate strictly as a commercial enterprise in line with the law, stressing that the era of duplicative deductions and fragmented oversight in the sector is over. Tinubu also disclosed that his administration would undertake a comprehensive review of the Petroleum Industry Act to address structural and fiscal anomalies weakening national revenue.

He further announced the approval of an implementation committee to oversee and ensure effective and coordinated execution of the executive order on the matter.

The President said, “Nigeria can no longer afford leakage where there should be leadership. We are safeguarding the Federation Account. We are strengthening our budget. We are acting in the national interest.”

He reiterated that the reforms are part of his administration’s commitment to Nigerians, adding that the policy direction aligns with his “Nigeria First” promise.

Based on the latest Federation Allocation Accounts Committee revenue data for 2025, the reallocation could have far-reaching implications for government earnings and sector institutions.

While many Nigerians and energy experts have expressed concerns over the potential impact of the policy on the oil and gas industry, a review of potential revenue reallocation suggests that the NNPC may be the least affected among the key players.

Other relevant government agencies operating within the sector could bear a heavier burden, particularly in terms of revenue losses, operational adjustments, and institutional restructuring.

Findings indicated that NNPC may lose about N906.91bn in management fees and Frontier Exploration Fund deductions. Each of the funds accounted for N453.455bn in 2025. A breakdown showed that the N453.455bn realised for frontier exploration fell short of the N710.520bn budgeted for the year, leaving a deficit of N257.066bn.

The monthly trend reveals the volatility of the fund. In January, N31.77bn was deducted from the frontier line, when PSC profits came in at N105.91bn. The February deduction rose to N38.30bn from a profit of N127.67bn, representing a 20.6 per cent increase on the January inflow.

March provided the first big surge, with N61.49bn allocated to frontier exploration from profits of N204.96bn, a jump of 60.5 per cent on February’s figure. April, however, saw deductions ease back to N36.58bn as profits slid to N121.93bn, a 40.5 per cent drop compared with March.

In May, the fund received N38.8bn, only slightly higher than April’s contribution, reflecting profit of N129.33bn. June delivered the lowest allocation so far this year, just N6.83bn, after profits collapsed to N22.77bn. That represented an 82.4 per cent fall from May.

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The flow recovered somewhat in July, with N25.34bn transferred into the fund from profits of N84.48bn. In August, the trend rose sharply to its highest level so far this year, as Profit Sharing Contract earnings surged to N263.13bn. This translated to N78.94bn remitted to the Frontier Exploration Fund, more than three times the July contribution and about twelve times the amount recorded in June.

The momentum was sustained in subsequent months. In September, PSC profit stood at N275.38bn, with N82.61bn deducted for frontier exploration. October recorded a sharp decline, as profit dropped to N36.82bn, while deductions amounted to N11.05bn.

In November, profit rebounded to N112.32bn, with N33.70bn transferred to the fund. However, by December, PSC earnings moderated again to N26.82bn, resulting in frontier exploration deductions of N8.05bn.

The same 30 per cent rule also applied to NNPC’s management fees, which mirrored the frontier deductions exactly. In January, NNPC booked N31.77bn; in February, N38.30bn; in March, N61.49bn; in April, N36.58bn; in May, N38.8bn; in June, N6.83bn; in July, N25.34bn; in August, N78.94bn; N82.614bn in September; N11.046bn in October; N33.695bn in November and N8.046bn in December.

The NUPRC is also expected to lose oversight of oil and gas royalty collections, a development that could significantly reduce its revenue from cost-of-collection fees, which are intended to fund its operational activities. Based on 2025 figures, the commission is projected to forgo approximately N7.55tn, while gas flaring penalties during the same period totaled N611.42bn.

Under the Petroleum Profits Tax, Hydrocarbon Tax, and other levies administered by the NRS, a total of N4.905tn was collected in 2025. This revenue will now be channelled directly to the Federation Account. The earnings, however, exclude company income tax on upstream activities and other revenue streams.

Similarly, the MDGIF, which was established to finance strategic gas infrastructure projects and improve domestic gas utilisation, recorded total collections of N596.61bn in 2025. With the recent directive, these funds will now be subject to the same public finance rules governing statutory allocations, signalling a shift in oversight.

Monthly inflows into the MDGIF in 2025 were highly variable: N35.07bn in January, N31.82bn in February, N52.99bn in March, N29.19bn in April, N41.27bn in May, N66.18bn in June, N50.98bn in July, N57.04bn in August, N66.32bn in September, N66.32bn in October, N59.42bn in November, and N46.90bn in December. The highest single-month collection of N66.32bn in both September and October accounted for about 11.1 per cent of the annual total each, while the lowest in April (N29.19bn) represented just under 4.9 per cent of the year’s total.

Cumulatively, these revenue streams would amount to a total of N14.72tn, although the actual inflows could rise or fall depending on fluctuations in crude oil production and exploration activities, which directly determine the amount of revenue generated.

The anticipated upsurge in oil and gas revenue remittances is expected to deliver a significant boost to sub-national earnings, providing state and local governments with much-needed fiscal resources. This inflow could sharply reduce budget deficits, easing financial pressures across the federation and enabling more consistent funding for critical infrastructure and social services.

Over the years, concerns have been raised by the Nigeria Extractive Industries Transparency Initiative and the National Assembly of Nigeria over revenue leakages, delayed remittances, and opaque deductions in the oil and gas sector.

With the new directive, Nigeria may be entering a new phase of fiscal discipline and transparency in its most critical revenue-generating industry.

Experts react

Commenting, the Chair of the Oil, Gas, and Energy Policy Forum, Professor Wumi Iledare, urged careful consideration of the recent Executive Order by President Bola Tinubu directing the direct remittance of oil and gas revenues to the Federation Account.

The order, described by Iledare as a “significant fiscal intervention,” aims to strengthen revenue transparency, curb discretionary retention, and ensure statutory remittances flow efficiently to the three tiers of government.

In a statement obtained by The PUNCH on Thursday, titled “PEWI Responds to Presidential Executive Order on Direct Remittance of Oil and Gas Revenues”, Iledare acknowledged the government’s stated objectives.

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“Safeguarding public revenues, curbing inefficiencies, and enhancing fiscal discipline are legitimate public finance priorities, particularly in a period of budgetary strain and debt sustainability concerns,” he said.

However, Iledare warned that parts of the Executive Order may intersect with statutory provisions under the PIA 2021, including the Frontier Exploration Fund, the Midstream and Downstream Gas Infrastructure Fund, and existing Production Sharing Contract fiscal arrangements.

“While Section 5 of the Constitution empowers the President to implement and enforce laws, substantive changes to statutory fiscal frameworks may require legislative amendments to ensure constitutional alignment and institutional certainty,” he noted.

The energy expert highlighted the importance of distinguishing between contractual entitlements, corporate retained earnings, and statutory earmarked funds under the PIA.

“Clarity in these distinctions is critical to avoid conflating contractual entitlements with discretionary fiscal practices,” Iledare explained.

On the issue of direct remittance of royalty oil, tax oil, and profit oil to the Federation Account, PEWI recognised potential benefits in enhancing transparency and reducing intermediation. Yet, the statement stressed that reforms must be carefully sequenced to maintain contractual stability and safeguard investor confidence.

“NNPC Limited’s dual role as both commercial operator and concessionaire under certain arrangements has long presented institutional tensions within the post-PIA framework.” Iledare said. “Any reform aimed at reinforcing NNPC’s commercial identity must be anchored in legal clarity and predictable governance mechanisms.”

The policy forum therefore recommended a three-pronged approach: prompt legislative consultation to ensure statutory coherence, transparent engagement with operators and investors, and a sequenced reform rollout that balances fiscal urgency with institutional stability.

“Reforms that improve transparency and fiscal integrity are welcome,” the statement concluded, “but sustainable reform must align with constitutional processes, statutory frameworks, and investor predictability. PEWI will continue to monitor developments and provide objective, technically grounded analysis in the public interest.”

Meanwhile, the Capital Market Academics of Nigeria has thrown its weight behind President Bola Tinubu following his recent signing of Executive Order 9 of 2026, which mandates the direct remittance of 60 per cent of oil and gas profits back to the Federation Account.

In a statement released on Thursday, the President of CMAN, Prof Uche Uwaleke, described the move as a “bold and historic” decision that corrects a long-standing fiscal imbalance created by the Petroleum Industry Act of 2021.

“This marks one of the most courageous reforms of his administration and a decisive step toward strengthening fiscal transparency and equity in revenue distribution,” Uwaleke stated.

Uwaleke noted that this structure undermined the principle of collective ownership of national resources. “By correcting this anomaly, the President has ensured that all tiers of government benefit equitably from the nation’s oil and gas wealth. NNPCL, as a limited liability company, must operate independently on its own revenues rather than relying on public funds,” he added.

While praising the reform, CMAN emphasised the need for institutional safeguards to ensure the new policy achieves its intended goals. Specifically, the institute called for the Chairman of the Revenue Mobilisation, Allocation and Fiscal Commission to be included in the committee overseeing the implementation of the Executive Order.

“CMAN underscores the importance of including the RMAFC Chairman to ensure transparency and accountability. This development is a victory for the Federation Accounts Allocation Committee and for fiscal justice in Nigeria.”

The group also urged the administration to extend these reforms to Joint Venture assets, arguing they should also be returned to the Federation Account to maximise national revenue. According to the statement, the anticipated surge in revenue will enhance the capacity of all government tiers to deliver essential services and stimulate the capital markets.

“We remain committed to advocating for policies that strengthen transparency and fairness. We call on all stakeholders to support the President’s reform agenda for the benefit of all Nigerians,” Uwaleke concluded.

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Revenue boom: World Bank faults states’ spending priorities, read full details

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The World Bank has criticised the spending priorities of Nigerian state governments, warning that increased revenues following recent economic reforms have not translated into proportionate investments in education, healthcare and social protection.

The global lender observed that although states had increased spending on essential public services, investments in transport infrastructure had grown considerably faster, even in states with poor human development indicators.

A Senior Economist at the World Bank Nigeria Office, Gloria Joseph-Raji, raised the concerns on Tuesday in Abuja during the launch of BudgIT’s 2026 State of States Report, themed ‘From Allocation to Impact: Rethinking State Spending Priorities.’

She said, “Spending on education, health, and social protection has also risen substantially, but it has not kept pace with the rapid growth in transport infrastructure spending, even in states with weaker human capital outcomes.”

Joseph-Raji explained that the bank’s October Nigeria Development Update, which examined budget implementation reports from all 36 states, found that governments had expanded transport infrastructure and reduced their debt burdens, particularly domestic debt, following increased fiscal allocations.

She attributed the revenue growth to petrol subsidy removal, exchange rate unification and improvements in tax administration since 2023, alongside federal intervention funds and the settlement of longstanding obligations to states.

According to her, the additional resources have enabled states to meet salary obligations and created opportunities for improved public service delivery.

However, she warned that excessive dependence on Federation Account allocations continued to expose state finances to fluctuations in federally shared revenue.

“In 2025, federation transfers accounted for more than three-quarters of revenue in all but a handful of states,” she said.

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She disclosed that federation transfers accounted for 73 per cent of aggregate state revenues between 2021 and 2025, excluding Lagos, while internally generated revenue was sufficient to cover recurrent expenditure in only two states.

Joseph-Raji noted that states received 26.72 per cent of net Federation Account revenues and now received 55 per cent of Value Added Tax revenue under the revised sharing formula.

Meanwhile, BudgIT’s Country Director, Vahyala Kwaga, disclosed that aggregate revenue across the 34 states covered in its comparative analysis rose from N4.99tn in 2022 to N15.53tn in 2025, representing an increase of N10.54tn.

He said FAAC allocations increased by more than 232 per cent, from N3.43tn to N11.38tn during the period.

Despite the revenue growth, Kwaga disclosed that the states had spent only N8.60tn, representing 24.4 per cent of their combined N35.22tn approved budgets, by June 2026.

“We must also examine how effectively they deploy the resources available to them, what they prioritise and whether their spending is delivering the outcomes that citizens need,” he said.

He explained that BudgIT had revised its assessment methodology to place greater emphasis on spending in education, healthcare, agriculture, water and sanitation, alongside revenue performance and debt sustainability.

Presenting the report, BudgIT’s Head of Research and Policy Advisory, Adejoke Akinbode, disclosed that total debt across the 35 states assessed increased by 10.41 per cent, from N10.57tn in 2024 to N11.67tn in 2025.

She identified Lagos as the most indebted state, with N2.9tn, while Osun spent N100.17bn servicing debt, equivalent to 28.6 per cent of its revenue.

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Akinbode said Lagos ranked first in overall fiscal sustainability, followed by Enugu, Bayelsa, Delta and Kebbi, while Cross River ranked last. Rivers was excluded because of inadequate fiscal data.

She urged states to reduce administrative costs, strengthen revenue collection and link borrowing to productive investments.

In her keynote address, an economist and lecturer at Amadeus University, Abia State, Dr Iboro Nelson, argued that rising government revenues had failed to compensate households for the economic hardship associated with recent reforms.

She disclosed that states collectively budgeted N1.32tn for healthcare in 2024 but spent N816.64bn, while education expenditure stood at N1.61tn against N2.41tn budgeted.

According to her, average annual spending per resident amounted to N3,483 on healthcare and N6,981 on education, equivalent to approximately N290 and N582 monthly, respectively.

“This is actually not fiscal space, but fiscal illusion,” she said.

Nelson blamed weak budget implementation, unrealistic expenditure projections, overlapping projects and excessive recurrent costs for the limited developmental impact of rising allocations.

Also speaking, a Programme Manager at the Ford Foundation’s West Africa Office, Joy Ehinor-Esezobor, urged governments to measure fiscal success by improvements in citizens’ lives rather than revenue growth or rankings.

“The ultimate measure of success should not simply be a better fiscal ranking, but better services and improved living conditions,” she said.

The programme is seeking to establish a framework for developing Nigeria’s underutilised small hydropower resources through private investment and public-private partnerships.

Source: punchng.com

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Otti woos US investors to Abia

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Governor Alex Otti of Abia State has concluded plans to bring investors, business leaders, policymakers, development partners, diplomatic representatives and entrepreneurs to the state to explore investment opportunities and strengthen commercial relations between Africa and the United States.

In a statement he signed and issued to newsmen on Sunday, the Chief of Staff to the Governor, Pastor Caleb Ajagba, disclosed that the Abia State Government had unveiled plans to attract American and other international investors to the state through the 2026 edition of the African Diaspora Conference and Expo, AFRICANDO, scheduled for this month.

Ajagba said, “AFRICANDO is a platform for translating international economic engagement into concrete investments and commercial partnerships. The state government is working with the organisers to ensure that the conference goes beyond speeches and networking to facilitate transactions, business agreements and sustainable investment.”

According to him, the 2026 edition, with the theme, “Deepening U.S.–Africa Commercial Ties in the Era of AfCFTA,” would connect investment opportunities in Abia and other African markets with American capital, technology, expertise and international distribution networks.

He added, “The African Continental Free Trade Area, AfCFTA, presents opportunities for African businesses to expand beyond their domestic markets, while international partnerships could help them improve production capacity and competitiveness.

“Abia is strategically positioned to benefit from the initiative because of its manufacturing and entrepreneurial base, particularly in Aba, which is known for indigenous manufacturing, commerce and craftsmanship.”

Ajagba added that Otti’s administration “is investing in infrastructure, strengthening public institutions and improving the business environment to position the state as a destination for private investment.”

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He explained that international delegates and prospective investors would be encouraged not only to attend conference sessions but also to visit strategic economic locations, manufacturing clusters, enterprises and government-backed projects to assess investment opportunities firsthand.

He said the approach was intended to give participants a practical understanding of the state’s economic potential and create opportunities for direct engagement with local businesses and relevant government agencies.

“AFRICANDO 2026 is not exclusively an Abia event. It is an international economic platform being hosted in Abia State,” he continued.

He listed agriculture and agro-processing, manufacturing, consumer goods, energy, financial services, healthcare, transportation and logistics, science and technology, artificial intelligence and emerging technologies among the sectors expected to receive attention.

A major feature of the conference, he said, would be a structured Deal Room and Investment Marketplace, where investment-ready projects from Abia and participating businesses would be presented to prospective investors.

Source: punchng.com

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Personal loans hit new high N1.99tn

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Nigerians’ outstanding personal loans increased by an estimated N58.5bn in the second quarter of 2026, reaching N1.99tn at the end of June, as households faced persistent inflationary pressures and high borrowing costs.

An analysis by The PUNCH of the Central Bank of Nigeria’s Second Quarter 2026 Economic Report showed that personal loans rose by 3.03 per cent from approximately N1.93tn recorded at the end of March.

The development came as total consumer credit increased by 3.26 per cent to N3.17tn from N3.07tn in the preceding quarter, representing an increase of about N100bn within three months.

The CBN stated, “Consumer credit outstanding increased by 3.26 per cent to N3.17tn, from N3.07tn in the preceding quarter. The increase reflected growth in both retail and personal loans, which rose by 4.10 per cent and 3.03 per cent, respectively.”

According to the report, personal loans accounted for 62.87 per cent of total consumer credit, while retail loans constituted the remaining 37.13 per cent.

This means that nearly N63 out of every N100 owed by consumers to financial institutions was classified as personal borrowing, highlighting its dominance in the consumer credit market.

Retail loans also increased by approximately N46.5bn to N1.18tn at the end of June, compared with an estimated N1.13tn in March, representing quarterly growth of 4.10 per cent.

Although retail loans recorded a faster percentage increase, personal loans contributed more to the outstanding stock of consumer credit.

The increase in personal borrowing occurred amid renewed inflationary pressures, which continued to affect household purchasing power.

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The CBN reported that headline inflation rose to 15.91 per cent in June 2026 from 15.38 per cent in March, reflecting increases in the prices of essential goods and services.

The report attributed the development largely to higher energy and commodity prices associated with geopolitical tensions in the Middle East, which increased production and transportation costs.

These conditions placed additional pressure on household expenditure, particularly for consumers whose incomes had not increased sufficiently to offset rising prices.

However, the report did not establish whether the increase in personal loans was driven primarily by household financial difficulties, consumption needs or improved access to credit.

The growth in consumer borrowing also occurred despite elevated lending rates in the banking sector.

 

 

According to the CBN, the average prime lending rate declined marginally to 19.01 per cent in Q2 from 19.37 per cent in the preceding quarter.

In contrast, the maximum lending rate increased slightly to 34.37 per cent from 34.34 per cent, indicating that borrowing remained expensive for some categories of bank customers.

Although these rates reflect broader banking sector lending conditions rather than specific personal loan charges, they provide an indication of the financing environment confronting borrowers.

A recent report ‘Enhancing Financial Inclusion & Advancement’ noted that four in every 10 Nigerians borrowing from formal financial institutions now take loans mainly for consumption and coping needs, as rising financial pressures increasingly push credit away from productive activities.

The ‘2026 Access to Financial Services in Nigeria Survey’ revealed that 40.8 per cent of formal borrowers used loans for coping and consumption, up sharply from 31.7 per cent in 2023.

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The 9.1 percentage-point increase made coping and consumption the largest purpose of formal credit, overtaking productive enterprise borrowing, which fell from 40.2 per cent to 34.3 per cent during the same period.

Borrowing for household assets also declined from 25.2 per cent to 23.4 per cent. The report warned, “Coping/consumption purposes rose from 31.7 per cent to 40.8 per cent; productive purpose fell from 40.2 per cent to 34.3 per cent. We need to ensure that credit builds productive capacity and does not produce distress.”

Formal credit use increased from six per cent of adults in 2023 to 10 per cent in 2026, with about 11.9 million Nigerians borrowing from regulated providers. When informal sources were included, 36 per cent of adults had access to some form of credit.

Credit use among informally employed Nigerians tripled from five per cent to 15 per cent, while borrowing among people aged 18 to 35 rose from four per cent to 10 per cent. Business owners recorded an increase from four per cent to 10 per cent, while farmers rose from two per cent to six per cent.

Source: punchng.com

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