Analyst Reacts to Tinubu's Executive Order on Oil Revenue, Highlights Potential Risks
President Bola Ahmed Tinubu's recent executive order, which mandates the direct payment of oil and gas revenues into the Federation Account, has sparked significant debate within Nigeria's energy sector. Richard Akinfele, a Lagos-based oil industry analyst, has provided a detailed analysis of the move, outlining possible risks and constitutional considerations.
Background of the Executive Order
The executive order, announced by presidential aide Bayo Onanuga on February 18, 2026, aims to strengthen public finances and curb revenue leakages in the petroleum sector. It took effect on February 13, 2026, and is designed to reverse structural and fiscal distortions introduced by the Petroleum Industry Act (PIA). The order mandates operators under production sharing contracts to remit Royalty Oil, Tax Oil, Profit Oil, and Profit Gas directly to the federation account, citing Section 5 of the Constitution and Section 44(3) for federal ownership of mineral resources.
Surface Prudence vs. Long-Term Stability
Akinfele noted that while the order appears fiscally prudent on the surface, especially during a period of revenue pressures and economic strain, it raises concerns about long-term sectoral stability. He emphasized that the PIA was enacted to transform the Nigerian National Petroleum Corporation (NNPC) Limited into a commercially viable and globally competitive energy company. The law granted NNPC revenue-retention mechanisms, including a 30% management fee and allocation of 30% of profit oil and gas for frontier exploration, to ensure reinvestment and strengthen upstream capacity.
Impact on NNPC's Investment Capacity
According to Akinfele, the executive order could significantly reduce NNPC's internally generated funds, potentially cutting retained capital from an estimated $45 billion over five years under the PIA framework to approximately $15 billion. This $30 billion reduction in investable capital may force the state oil company to increase external borrowing to finance capital expenditure, which carries risks such as higher debt servicing obligations and increased exposure to oil price volatility. He warned that this could weaken competitiveness, slow frontier basin exploration, delay project timelines, and shake investor confidence rebuilt after decades of regulatory instability.
Constitutional and Policy Considerations
Akinfele also addressed the constitutional dimension, questioning whether substantive fiscal adjustments of this magnitude can be implemented through executive action alone, given that the PIA is an Act of the National Assembly. He argued that frequent policy reversals risk reopening instability in Nigeria's oil sector, which has endured decades of uncertainty. While acknowledging arguments that the order enhances fiscal transparency and ensures immediate revenue availability for public expenditure, he stressed that the sustainability of those revenues depends on the health of NNPC.
Call for Coherence and Dialogue
The analyst concluded that Nigeria cannot afford to weaken the institution expected to anchor its energy future. He called for constructive engagement among policymakers, legislators, and industry leaders to ensure that short-term fiscal objectives do not compromise long-term sector viability. Akinfele emphasized that the challenge is not merely about revenue remittance but about safeguarding the financial foundation for sustainable oil and gas development.
