The Federation Account Allocation Committee (FAAC) has started receiving the full proceeds from Nigeria’s Production Sharing Contract (PSC) oil revenues following the implementation of President Bola Ahmed Tinubu’s Executive Order 9 of 2026.
The policy shift follows compliance by the Nigerian National Petroleum Company Limited (NNPC) with the presidential directive aimed at improving fiscal transparency and boosting government revenues from the oil and gas sector.
According to fresh fiscal reports, the Federation has been receiving 100% of PSC profits since February 2026, marking a major departure from the revenue-sharing structure previously operated under the Petroleum Industry Act (PIA).
What the report is saying
The latest fiscal report confirmed that “from February 2026, PSC distribution is in compliance with Executive Order 9 2026,” signaling the full implementation of the directive.
Under the previous arrangement in 2025, PSC revenues were distributed using the Petroleum Industry Act’s 30:30:40 formula.
- Out of the N438.54 billion PSC profit recorded in the first quarter of 2025, N131.56 billion was deducted by NNPCL as management fees.
- Another N131.56 billion was allocated to frontier exploration activities.
- Only N175.42 billion, representing 40% of the total PSC profit, was remitted into the Federation Account for distribution through FAAC.
The structure meant that N263.12 billion was deducted before revenue distribution, leaving less than half of the total earnings available to the federal, state, and local governments.
Get up to speed
The previous PSC revenue-sharing framework had faced criticism from state governments and fiscal policy experts who argued that the deductions significantly reduced distributable revenues at a time when subnational governments were dealing with rising debt obligations and increasing spending pressures.
Executive Order 9, signed by President Tinubu in February 2026, introduced sweeping changes to the structure of oil revenue remittances.
- The order suspended NNPCL’s collection of management fees from PSC revenues.
- It also halted deductions for frontier exploration funding previously allowed under the Petroleum Industry Act.
- The directive mandated the full remittance of oil and gas revenues into the Federation Account for sharing among the three tiers of government.
The Executive Order further suspended the payment of gas flare penalties into the Midstream Gas Infrastructure Fund and clarified regulatory responsibilities between the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
Government officials said the reforms were necessary to strengthen fiscal discipline, improve transparency, and eliminate off-budget deductions that reduced revenues available for national distribution.
What you should know
- In May 2025, President Tinubu also signed the Upstream Petroleum Operations Cost Efficiency Incentives Order, introducing performance-based tax incentives for upstream operators that achieve verifiable cost savings aligned with defined industry benchmarks.
SOURCE: Nairametrics