Huge Win for States: How Tinubu’s New Oil Revenue Order Boosts Monthly Allocations for All 36 States

The Dawn of a New Fiscal Era: Executive Order 9 of 2026 Explained

In a move that has sent shockwaves through the glass towers of NNPC Towers and brought cheers to the 36 Government Houses across the nation, President Bola Ahmed Tinubu has officially signed the landmark Executive Order No. 9 of 2026. This directive is not just another piece of administrative paperwork; it is a fiscal earthquake designed to dismantle the opaque walls of Nigeria’s oil revenue remittance system. Signed and gazetted on February 13, 2026, the order mandates that every kobo of oil and gas revenue be remitted directly to the Federation Account, effectively ending the era of “deductions at source” that have long starved the subnational governments.

The core of this revolution lies in the immediate enforcement of Section 44(3) of the Nigerian Constitution, which vests the ownership of all mineral oils and natural gas in the Federal Government for the benefit of all citizens. For years, the Petroleum Industry Act (PIA) of 2021 was criticized for creating legal “leakages” where billions of dollars vanished before they ever reached the Federation Account Allocation Committee (FAAC). By invoking his executive powers, Tinubu is effectively clawing back the constitutional revenue entitlements of the federal, state, and local governments, promising a level of transparency that was previously thought impossible.

This policy shift addresses a “shock factor” that many in the industry feared to mention: the fact that more than two-thirds of Nigeria’s potential oil remittances were being swallowed by administrative fees and speculative funds. The new order acts as a surgical strike against these inefficiencies. It is a bold gambit to stabilize the national budget and ensure that the wealth buried under the Nigerian soil finally reflects in the bank accounts of the states and local councils that need it most for grassroots development.

Goodbye to ‘First-Line’ Deductions: Stripping NNPC of Its 30% Management Fee

For decades, the Nigerian National Petroleum Company (NNPC) Limited has operated with a financial autonomy that often left the three tiers of government holding the short end of the stick. Under the previous PIA framework, NNPC Ltd was entitled to retain a staggering 30% of the Federation’s oil revenues as a “management fee” on Profit Oil and Profit Gas. This was in addition to a separate 20% retention of its profits for working capital. The Federal Government has now officially declared this extra 30% deduction “unjustified” and “duplicative,” arguing that the 20% already retained is more than sufficient for the company’s operational needs.

The impact of this single change is massive. By stripping away this 30% management fee, billions of naira that were previously “reserved” for administrative overheads will now flow directly into the distributable pool for states. Analysts suggest that this move alone could increase the monthly FAAC distribution by hundreds of billions of naira. It is a dramatic repositioning of NNPC Ltd, forcing it to behave like a truly commercial entity that survives on its own efficiency rather than on automatic slices of the national wealth.

Critics within the industry have raised eyebrows, questioning if this will leave the national oil giant underfunded. However, the Presidency remains firm, noting that “the era of using the Federation’s revenue as a corporate slush fund is over.” This decision forces NNPC Ltd to look inward and optimize its operations, while the rest of the country watches as the “first-line deductions” that once crippled state budgets are dismantled in real-time. It is a punchy, direct intervention that changes the power dynamic in Nigeria’s oil sector forever.

The Frontier Exploration Fund Shift: Why Idle Billions are Moving to FAAC

Perhaps the most controversial and daring aspect of Executive Order 9 is the total suspension of the Frontier Exploration Fund. Under sections 9(4) and (5) of the PIA, 30% of profit oil and gas was earmarked for exploration in frontier basins—areas like the Chad Basin and the Benue Trough. While the intention was to find more oil, the reality was a mountain of “idle cash” totaling trillions of naira, sitting in accounts while Nigerian citizens suffered from lack of basic infrastructure. Tinubu’s order has now ended this speculative spending, directing those funds into the Federation Account for immediate use.

The logic is simple but profound: why spend trillions searching for oil in speculative deserts when the oil we already have isn’t funding our schools, hospitals, and security? By redirecting these funds, the administration is prioritizing the “here and now” over the “maybe later.” This shift is estimated to inject over ₦1.42 trillion into the Federation Account in 2026 alone. This is money that can be spent on urgent national priorities such as energy transition investments and security operations in the very states where these frontier basins are located.

This move has sparked a heated debate between long-term energy strategists and immediate economic realists. While some argue that Nigeria needs new reserves for the future, the administration points to the immediate liquidity crisis and the need for debt sustainability. The result is a surge in available revenue that will be shared at the next FAAC meeting, making it one of the most anticipated fiscal gatherings in the history of the Fourth Republic.

Restoring Constitutional Entitlements to the Three Tiers of Government

The signing of this order is a direct attempt to “correct” what the Presidency describes as a “legal anomaly” created by the 2021 Petroleum Industry Act. By creating structural channels that diverted revenues into various sub-funds, the PIA inadvertently diluted the constitutional rights of the three tiers of government. Executive Order 9 acts as a corrective lens, refocusing the entire petroleum industry back onto its primary duty: serving the Nigerian people through the Federation Account.

The legal basis for this is ironclad, rooted in the President’s executive authority under Section 5 of the Constitution. By centralizing the remittance of Royalty Oil, Tax Oil, Profit Oil, and Profit Gas, the order eliminates the “middleman” role that NNPC Ltd had assumed. Every operator and contractor is now legally bound to pay the government’s share directly into the Federation Account, cutting out any possibility of administrative delays or “discretionary” retentions by the national oil company.

This restoration of constitutional order is a significant victory for the principle of fiscal federalism. It ensures that the revenue sharing formula—which allocates funds to the Federal, State, and Local governments—is applied to the entirety of the government’s oil income, not just what is left over after various agencies have taken their “cut.” This is the transparency the 2026 era demands, and it sets a new benchmark for how national resources should be managed in a democratic setting.

Non-Oil Producing States: The Unexpected Beneficiaries of the New Inflow

While the 13% derivation fund will continue to benefit oil-producing states like Delta and Rivers, the real “State Spotlight” story here is the windfall coming to the non-oil producing states. In the past, these states felt the pinch of NNPC deductions more acutely, as they had no other significant oil-related revenue streams to fall back on. With the elimination of the 30% management fee and the Frontier Exploration Fund, the “distributable pool” for all 36 states is set to expand by roughly 40-50%.

For states in the North Central, North East, and South West, this means a massive injection of liquidity. States like Kano, Oyo, and Benue, which rely heavily on FAAC for their civil service salaries and infrastructure projects, will see a noticeable jump in their monthly alerts. This isn’t just a win for the governors; it’s a win for the millions of citizens who have waited for years for their state governments to have the financial capacity to tackle local issues.

This fiscal recalibration is expected to redefine state-level governance. With more money coming in, the “excuse” of limited funds for development will be harder to maintain. The public is already asking: “Now that the money is coming directly to the states, how will it be used?” This transparency at the federal level is inevitably going to force a new level of accountability at the state level, as citizens track every extra billion that flows into their local treasuries.

Gas Flare Penalties: From Infrastructure Funds to Public Pockets

In another dramatic twist, Executive Order 9 has suspended the payment of gas flaring penalties into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). Previously, these penalties were locked away for specific sector reinvestments. Now, they are being treated as general revenue for the Federation Account. This move recognizes that environmental damage from gas flaring affects the whole country, and the penalties should be used to support the broader economy and remediation efforts across all states.

The logic behind this move is to ensure that environmental sanctions are not just used to build more gas pipes but are also available to support healthcare for affected communities and education for the youth. The President has also mandated that any future expenditures from the MDGIF must strictly comply with public procurement laws, a move aimed at ending the “quiet” spending that often characterized such specialized funds.

This redirection of flare penalties adds another layer to the “revenue boom” for the states. It’s a clear signal that the administration is prioritizing immediate social welfare over the slow-moving expansion of the gas midstream sector. For many Nigerians in the Niger Delta and beyond, this is a long-overdue realization that environmental penalties should benefit the people directly, not just sit in an infrastructure fund for years on end.

Comparative Growth: Projected Revenue Shifts for 2026

To truly understand the magnitude of this change, one must look at the numbers. The redirection of the 30% Management Fee and the Frontier Fund is expected to move over ₦2.5 trillion annually from “internal deductions” to the Federation Account. Below is a simulated breakdown of how this fiscal shift looks compared to previous years:

The ASCII graph below illustrates the sharp rise in the distributable revenue pool following the Executive Order:

Statutory Distributable Pool (Trillions of Naira)
|
|          /-- 2026 (₦19.84T)
|         /
|        /
|  -----/  2025 (₦15.26T)
| /
|/
---------------------------- Years

The End of the ‘Dual Role’: Repositioning NNPC Limited as a Pure Commercial Entity

One of the most profound structural changes introduced by the order is the end of NNPC Ltd’s dual role as both a commercial operator and a “concessionaire” under Production Sharing Contracts (PSCs). For years, this arrangement allowed NNPC to influence the very operating costs it was meant to manage, creating massive “competitive distortions.” By removing its power to deduct fees at source, the government is effectively stripping NNPC of its regulatory-like powers and forcing it to compete on a level playing field.

This is a “shock factor” move for the industry. NNPC Ltd will no longer be the “middleman” that manages the government’s share of oil. Instead, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will now serve as the primary interface for integrated operations. This move is designed to make NNPC “hungry” and efficient. Without the safety net of automatic 30% cuts, the company must now prove its worth as a profit-driven enterprise, as originally envisioned by the PIA.

Critics warn that this could politicize NNPC’s financial architecture, as it now depends on the executive’s discretion for its cash flow. However, the administration argues that the current system was already politicized—just behind closed doors. By bringing the revenue into the Federation Account, the government is ensuring that the wealth of the nation is handled with the transparency that only the FAAC process provides. This is a bold gamble on the future of Nigeria’s energy governance.

Challenges Ahead: Navigating PENGASSAN Pushback and Legislative Hurdles

As expected, this revolution has not been welcomed by everyone. The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has already expressed “grave concerns” over the sudden removal of funding streams that support their members’ welfare and industry exploration. There is a looming threat of strike action as the union argues that “Executive Order 9 is a short-sighted fiscal grab that jeopardizes the long-term sustainability of the industry.”

Beyond the unions, there is a legal cloud hanging over the order. Because the Executive Order “chips away” at sections of the Petroleum Industry Act—which is a law passed by the National Assembly—there are questions about whether the President has overstepped his bounds. Constitutional lawyers are already debating whether an Executive Order can suspend a legislatively mandated fund like the Frontier Exploration Fund. The coming weeks may see a showdown between the Presidency and the National Assembly, as lawmakers may demand a formal amendment to the PIA rather than a “rule by decree” approach.

Despite these challenges, the Tinubu administration remains undeterred. The Presidency has hinted that a comprehensive review of the PIA is forthcoming, which will formally codify these changes into law. In the meantime, the implementation committee, chaired by the Minister of Finance, Wale Edun, is moving at full speed to ensure that the new remittance rules are applied by the next FAAC sharing cycle. It’s a high-stakes game of political and economic chess that will define the rest of 2026.

A Future of Transparency: What to Expect in the Next FAAC Meeting

As we move into the final months of early 2026, all eyes are on the next meeting of the Federation Account Allocation Committee. This will be the “moment of truth” for Executive Order 9. For the first time, states will see the direct results of the suspension of NNPC’s fees. If the projections hold, we could see the highest monthly disbursement in Nigerian history—a record-breaking windfall that could fundamentally change the pace of development across the 36 states.

This is a turning point for Nigeria. The “State Spotlight” is no longer just on how much oil we produce, but on how transparently we share the proceeds. President Tinubu’s Executive Order has pulled back the curtain on a decade of opaque deductions, promising a future where the wealth of the soil is shared fairly among the three tiers of government. It is a bold, dramatic, and perhaps risky maneuver, but for the millions of Nigerians waiting for their roads to be fixed and their schools to be funded, it is a win that has been a long time coming.

The conversation is just beginning. Will your state government use this extra billion wisely? Will NNPC Ltd survive as a lean, commercial entity? Or will the pushback from unions and lawmakers stall this fiscal revolution? Join the conversation on Naija NewsBurrow and let us know your thoughts. One thing is for sure: the 2026 fiscal landscape of Nigeria has been permanently altered.