Navigating the Benefits of Executive Order 9

The Executive Order 9, endorsed by President Bola Ahmed Tinubu on February 13, 2026, represents a crucial initiative aimed at tackling the longstanding issue of revenue leakages in Nigeria's oil and gas industry.

However, concerns have been expressed by commentators and the general public regarding the government's strategy of consolidating all revenue streams into a single account, especially as questions arise about the utilization of the funds being generated.

Some critics insinuate that these moves may be politically motivated, aimed at amassing resources for the upcoming 2027 elections. While we refrain from endorsing this perspective, we urge the government to provide clarity on how the trillions of naira collected from various sources have been managed.

Over the past three years, the performance of the budget has been disappointing, and the living conditions of citizens have yet to improve. Questions linger: where is the money going?

Returning to the main topic of Executive Order 9, it's intended to reform Nigeria's oil and gas revenue framework by mandating that all oil proceeds be deposited directly into the Federation Account. This directive effectively negates previous retention protocols, which allowed entities like the Nigerian National Petroleum Company Limited (NNPCL) to retain substantial fees before making remittances to the common fund.

The announcement detailing the signing of the Executive Order cited the president's commitment to enhancing oil and gas revenues for the Federation. It aimed to minimize wasteful spending, eliminate redundancies in this crucial sector, and reallocate resources to benefit the Nigerian populace.

The new regulation requires all oil and gas operators and contractors to remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and other governmental entitlements directly into the Federation Account. It also abolishes the NNPCL's 30% management fee on oil profits and eliminates the 30% Frontier Exploration Fund (FEF) previously held by the NNPCL for inland exploration. These funds are now obligated to be paid directly into the Federation account. Additionally, the new order halts gas flare penalties that were previously allocated to the Midstream and Downstream Gas Infrastructure Fund (MDGIF), redirecting them instead to the Federation account and mandating that revenue- collecting agencies like the Nigeria Revenue Service (NRS) and Nigeria Customs Service remit all collections without deducting fees for their services. Furthermore, a high-level committee, led by the finance minister, has been set up to oversee this transition and ensure adherence to the new rules.

The introduction of Executive Order 9 was a calculated response to the uncertainty surrounding remittance processes by the NNPCL following the enactment of the Petroleum Industry Act (PIA) in 2021. Contrary to the belief that the PIA would enhance revenue and eliminate leaks, its implementation led to a significant and unexpected decrease in revenue, causing tension between the NNPCL, the Nigerian Governors' Forum (NGF), the Nigeria Extractive Industries Transparency Initiative (NEITI), and civil society organizations involved in the extractive sector. For context, section 64(c) of the PIA designates the NNPCL as responsible for oil lifting and sales, with a management fee of 30% in addition to the FEF.

The ambiguity over whether the 30% management fee and FEF are treated collectively or separately has resulted in the NNPCL deducting a total of 60% (30% management fee and another 30% FEF) from oil revenue since August 2022. Consequently, the corporation has taken 60% of the oil revenues, leaving only 40% for the Federation account.

This situation has significant ramifications for the Federation. While the Federation recorded $11.9 billion from Joint Venture sales in 2021, it dropped to only $1.8 billion in 2023. Additionally, the Federation's share from crude oil sales plummeted from 74.43% in 2021 to 14.14% in 2023, with the NNPCL's overall contribution diminishing from eight streams in 2021 to merely three in 2023, resulting in a total of $5.01 billion. Despite high oil production in 2023, the Federation's portion of Joint Venture crude oil revenue fell by 79%, a shortfall linked to the PIA's effects.

Although Executive Order 9 has been praised as a vital step towards enhancing transparency and curtailing the NNPCL's opaque financial practices, stakeholders have voiced concerns regarding its potential effects on the sector. The NGF has expressed strong endorsement for the order, deeming it an essential reform aimed at promoting fiscal transparency and aligning with constitutional requirements. The governors are hopeful for a substantial uplift in monthly FAAC allocations.

However, we challenge them to reflect inwardly. Following the removal of fuel subsidies in 2023, governmental allocations across all tiers have tripled, yet this has not been matched by an increase in social services provided to the populace.

If they do not conduct a sincere self-assessment, any additional revenues could simply translate into further extravagance, with insufficient focus on the actual needs of the citizenry.

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has already opposed the directive, arguing that it conflicts with the PIA and threatens approximately 4,000 jobs and investor confidence. The labor union has called for immediate engagement with stakeholders to clarify the implications of Executive Order 9 for oil workers. Conversely, NEITI praised the presidential directive as a progressive move toward enhanced financial accountability.

To achieve a balanced solution, we propose that the federal government introduce an executive bill to the National Assembly targeting the amendments of contentious sections of the PIA. This approach would ensure that the presidential mandate is not subjected to political fluctuations. Although an Executive Order allows for prompt policy changes by the president without legislative approval, it comes with significant drawbacks, including susceptibility to being overturned by judicial rulings or subsequent administrations, making it less stable and democratic compared to laws enacted through the legislative process.

Moreover, we urge the federal government to create a framework detailing how the additional funds generated from Executive Order 9 should be allocated among states and local governments.

President Tinubu must secure the commitment of state governors and local government chairs to prioritize areas such as security, health, education, water supply, agriculture, and food security as they benefit from this financial windfall. Numerous examples exist on how to effectively utilize oil revenue benefits. For instance, citizens of Saudi Arabia receive access to free or highly subsidized public services, extensive welfare solutions, and government-funded infrastructure projects as a result of their oil wealth. This has transformed Saudi Arabia from a previously impoverished agrarian society to a modern economy that boasts one of the highest living standards in the Middle East. If managed appropriately, Nigerians too can enjoy similar benefits from increased revenues through effective governmental application.