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Nigeria's oil revenue overhaul ends deductions under new presidential order

A sweeping reform reshapes Nigeria's oil economy—no more hidden deductions. Will states finally see the billions lost to opaque practices?

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1 min read
The image shows a man in a suit and tie sitting at a desk with a name board, water bottles, mics,...
The image shows a man in a suit and tie sitting at a desk with a name board, water bottles, mics, and other objects on it, and a flag in the background. He appears to be in the middle of a speech, likely discussing the importance of the Nigerian government's efforts to improve the economy.

Nigeria's oil revenue overhaul ends deductions under new presidential order

Nigeria’s oil revenue system has undergone major changes following a presidential order in early 2026. The reforms now require full remittance of Production Sharing Contract (PSC) profits to the Federation Account, ending previous deductions. Officials say the move aims to improve transparency and fiscal discipline across the sector. Under the old system, PSC revenues were split using a 30:30:40 formula as outlined in the Petroleum Industry Act (PIA). In early 2025, N438.54 billion in PSC profit was recorded, but only N175.42 billion—about 40%—reached the Federation Account after deductions. A further N263.12 billion was withheld before distribution.

President Bola Ahmed Tinubu’s Executive Order 9, issued in February 2026, overhauled this process. The order stopped deductions for frontier exploration and management fees previously collected by the Nigerian National Petroleum Company Limited (NNPCL). It also mandated that 100% of PSC oil revenues now go directly to the Federation Account Allocation Committee (FAAC).

Government officials explained that the reforms address long-standing criticism from state governments and fiscal experts. The changes clarify roles between the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority. The goal is to eliminate off-budget deductions that reduced funds available for national sharing. The new rules ensure all PSC profits flow into the Federation Account without prior deductions. Regulatory responsibilities have been streamlined, and previous funding mechanisms for frontier exploration have been suspended. These adjustments are expected to increase available revenue for federal, state, and local governments.

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