President Bola Tinubu has signed an executive order that could significantly increase the funds shared among the federal, state and local government levels. The order requires that a range of oil and gas revenues be paid directly into the Federation Account. This change could add roughly N14.6 trillion in allocations when the Federation Account Allocation Committee next disburses funds.
Under the order, revenue from royalty oil, tax oil, profit oil, profit gas and other payments under production sharing, profit sharing and risk service contracts must now go straight into the Federation Account. Previously, portions of these revenues were held or channelled into other accounts before sharing. The direct remittance of these receipts is expected to increase the base on which statutory allocations are calculated.
The order also ends longstanding practices that allowed the national oil company to retain sizeable shares of profit oil and profit gas as a management fee, and to allocate funds into a frontier exploration facility under existing petroleum laws. These amounts are now to be remitted instead into the Federation Account for sharing with all tiers of government. Analysts estimate the pooled revenues from these sources could total more than N14 trillion.
The directive further requires the Nigeria Customs Service and the Federal Inland Revenue Service to ensure certain petroleum related taxes and fees are paid into the Federation Account rather than into separate special accounts. Penalties for gas flaring are also to be remitted directly into the shared account rather than used first for infrastructure funding.
The executive order took effect on February 13 2026, and implementation reportedly began earlier in January. The effects on allocations should become clear when the Federation Account Allocation Committee publishes its next sharing figures.
President Tinubu said the measure aims to end excessive deductions and overlapping charges that have weakened remittances to all levels of government and slowed economic development. He said it ensures that oil and gas revenue serves the interests of Nigerians, strengthens fiscal accountability and improves the fairness of the revenue sharing system.
Some legal experts have welcomed the intent behind the order but cautioned that changes to revenue allocation practices created under existing law may require legislative review to ensure legal clarity. Others, including financial analysts, have described the move as historic and likely to improve transparency, boost government revenues and support funding for public services.
