By Deborah Nnamdi
The Federal Government has approved a transition period for the implementation of direct payments by oil contractors into the Federation Account under the recent Executive Order 9 issued by President Bola Ahmed Tinubu.
The decision was taken by the Implementation Committee for Executive Order 9 of 2026 following its inaugural meeting held on February 26, 2026. The policy is aimed at strengthening the management of petroleum revenues and safeguarding public funds.
In a statement issued on Monday by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who chairs the implementation committee, the government said the transition period would allow the new system to be introduced without disrupting existing contractual and financing arrangements in the oil sector.
The policy follows the Executive Order issued by Bola Ahmed Tinubu directing that revenues from petroleum operations be handled in a way that protects public funds and strengthens the finances of the three tiers of government. The order mandates that payments such as profit oil, royalty oil and tax oil be made directly into the Federation Account.
Edun said the committee agreed that the shift to the new system must be carefully managed to maintain investor confidence while protecting Nigeria’s revenue.
“With respect to Section 2, Sub-section 3 of Executive Order 9 on direct payments by contractors into the Federation Account, the Implementation Committee agreed that this transition must be implemented in a manner that respects existing contractual and financing arrangements and maintains investor confidence,” he said.
He added that the committee approved a defined transition period before the full operationalization of the new payment system, explaining that existing payment arrangements would remain in place until detailed operational guidelines are issued.
“Until the Committee issues detailed guidelines, contractors will continue to remit under the current process. During the transition period, the Committee will issue clear, standardized guidance to ensure an orderly changeover,” Edun said.
To ensure proper implementation, the committee approved the creation of a technical subcommittee to prepare the detailed framework for the transition. The subcommittee has been given three weeks to develop guidelines that will govern the new system of direct remittance and will also commence a review of the Petroleum Industry Act to address structural and fiscal issues affecting revenues accruing to the Federation.
“The Technical Subcommittee will develop the detailed guidelines for the transition to direct remittance within three weeks and commence a review of the Petroleum Industry Act to address structural and fiscal anomalies that weaken Federation revenues,” Edun stated.
The subcommittee will be led by the Special Adviser to the President on Energy, Mrs. Olu Verheijen, and will include senior officials from key government institutions such as the Solicitor-General of the Federation and Permanent Secretary of the Federal Ministry of Justice, the Chairman of the Nigeria Revenue Service, the Chairman of the Forum of Commissioners of Finance, as well as representatives of the Minister of State for Petroleum Resources (Oil). The Budget Office of the Federation will serve as its secretariat.
The Implementation Committee said its work is aimed at ensuring that revenues generated from Nigeria’s oil and gas sector are properly accounted for and paid into the Federation Account in line with constitutional provisions. It reaffirmed the President’s directive that revenues from petroleum operations must be handled in a way that upholds constitutional principles and supports the fiscal stability of federal, state and local governments.
As part of the measures contained in Executive Order 9, the government also directed NNPC Limited to stop certain deductions related to production sharing contracts. The company will cease collecting a 30 per cent management fee and a 30 per cent frontier exploration fund deduction from profit oil and profit gas under Production Sharing Contracts, with immediate effect.
In addition, all remittances of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund have been suspended with immediate effect in line with the Executive Order.
The committee said it would continue to provide guidance and updates as work on the new system progresses and expressed appreciation to stakeholders in the petroleum industry and government institutions for their cooperation in implementing the reforms. It added that the measures form part of the President’s broader efforts to ensure that Nigeria’s petroleum resources translate into clear and measurable benefits for citizens across the country.
