Energy
Ending Fiscal Capture in the Petroleum Sector: A Policy Agenda for Reclaiming Federation Revenues from NNPCL
By Nick Agule
On 18 February 2026, President Tinubu signed Executive Order 9 to restore the constitutional revenue entitlements of the Federal, State, and Local Governments that were altered by the 2021 Petroleum Industry Act (PIA), which introduced mechanisms that diverted significant Federation revenues through various deductions and charges.
It is important to distinguish the FEDERATION, which includes all three tiers of government (Federal, State & Local Governments), from the Federal Government (FG) alone for a better appreciation of this article.
The constitutional basis for the President’s decision is explicit in Section 162, which provides that:
_“(1) The Federation shall maintain a special account to be called “the Federation Account” into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.”_
Section 162 of the Constitution is emphatic that ALL revenues collected by the Government of the Federation be paid into the Federation Account, except for specific personal income taxes.
The PIA directly contravenes section 162(1) of the constitution by three provisions:
1. The NNPCL to remit profit oil and gas proceeds to the Federation Account after deducting a 30% management fee (Section 64(c));
2. The diversion of 30% of NNPCL’s profit oil and gas under PSCs, profit‑sharing, and service contracts into a frontier exploration escrow account, which the NNPCL could spend on exploration in frontier basins (Sections 9(4)–(5));
3. The allocation of 10% of licence rents to the Frontier Exploration Fund (Section 9(3)).
These provisions effectively kidnapped Federation revenues before they reached the Federation Account.
The NNPCL’s 30% management fee far exceeded the actual costs of transporting and selling crude, and the company does not fund or produce crude under PSCs, meaning it benefited from production financed by international oil companies.
The frontier exploration fund also enabled extensive spending by the NNPCL without commercial discoveries. Between 2023 and 2024 for example, the NNPCL reportedly spent over $1 billion on exploration in frontier basins with no results, including more than $100 million on an abandoned well (Ebenyi) in Nasarawa State and about $300 million in the Chad Basin. The frontier exploration fund should either be abolished or the funds redirected towards the development of renewable energy.
*Hijack of Joint Venture (JV) Assets by the NNPCL*
A further issue concerns JV assets, which President Tinubu must look into. Historically, JV assets belonged to the Federation and were managed by NAPIMS on its behalf. Although the NNPCL CFO acknowledged this in a National Assembly hearing, he also claimed, incorrectly and contradictorily, that the PIA transferred Federation-owned JV assets to NNPCL. But section 54(1) of the PIA authorises only the transfer of NNPC’s own assets to NNPCL, not Federation assets. Since the NNPCL has not demonstrated that the JV assets were valued, formally transferred, or paid for, the assets legally remain Federation property.
Watch the CFO concede that the JV assets are assets of the Federation here:
Arguments that the Federation owns both the NNPCL and the Federation Account overlook the fact that consolidating JV revenues into NNPCL’s loss‑making books exposes the revenues to unrelated operational costs born by the NNPCL like costs including salaries of refineries generating zero revenues, non-functional gas plants and pipelines etc, whereas direct remittance to the Federation Account preserves the revenues for the three tiers of government.
The President has boldly and courageously initiated a critical corrective measure by redirecting Federation revenues from the NNPCL back into the Federation Account, and to fully re-establish constitutional fiscal compliance, the following additional steps are necessary:
1. Return JV assets from NNPCL to the Federation.
2. Redirect the 10% licence rent allocation from the frontier exploration fund to the Federation Account.
3. Scrap the frontier exploration fund or repurpose it for renewable energy.
4. Replace the PIA with a comprehensive Energy Industry Act.
5. Establish an independent petroleum assets management agency for JVs and PSCs, ensuring all revenues go directly to the Federation Account.
6. Privatise the NNPCL by offering its shares on the capital market to Nigerians at home and abroad, enabling it to operate as a fully commercial entity comparable to Shell, Mobil, Total, and Chevron etc.
7. Conduct a forensic audit of all funds associated with the 30% management fee, the 30% frontier exploration fund, the 10% licence rent fees, and JV revenues consolidated into NNPCL’s books from 2021 to 2026.
8. Abolish the 4% Development Levy under the Nigeria Tax Act (2025), which consolidated the Tertiary Education Tax, NITDA levy, NASENI levy, and Police Trust Fund levy and require that all corporate taxes flow straight into the Federation Account instead of being retained by federal agencies.
9. With revenues from oil, taxes, removal of subsidies on petrol, dollar, electricity and other sources now flowing into the Federation Account and shared nationwide, these funds belong to the people. The 37 men – the President and governors – who are in control of these monies must urgently embrace reforms that ensure transparency, efficient spending, and real good governance so that every naira delivers schools, hospitals, and opportunities for citizens.
_Nick Agule is an energy expert._
Twitter: @NickAgule
Email: nick.agule@yahoo.co.uk
Edo State Governor, Senator Monday Okpebholo, has fulfilled his campaign promise of providing a 2.5MVA injection sub-station to Udomi community in Esan Central Local Government Area of Edo State. The governor inspected the completed project, accompanied by top officials, and expressed joy at bringing development to the people.
Chief Press Secretary to Governor Monday Okpebholo, Fred Itua, disclosed this in a statement, highlighting the governor’s commitment to improving the lives of Edo people. Fred Itua noted that the project is a testament to the governor’s dedication to his people.
The sub-station will connect six communities, including Udomi 1, Ujabhole 1, Unogbo, Idimoghodor, Ibhioloulu, and Afuda, all in Uwessan, and provide constant electricity supply to boost economic development. Governor Okpebholo said, “I feel very happy and great, bringing development to the people of these communities. This is a new development for the people as they are feeling the impact of governance, which should be closer to the people.”
The Business Head, Technical Operations at the Benin Electricity Distribution Company (BEDC), Engr. Mokwenye Jidenmah, commended the governor for the sub-station, stating that it would benefit the communities. “This is a 2.5MVA injection sub-station which is meant to serve over nine transformers around here, bringing down the 33KVA line to 11KVA lines,” Jidenmah explained.
Governor Okpebholo also visited the construction site of the Edo State College of Nursing, Health Sciences and Technology, and thanked the Edo State House of Assembly for passing the bill. “I want to thank the Edo State House of Assembly for their support in ensuring that they passed the Bill for the Edo State College of Nursing, Health Sciences and Technology Law Udomi, 2025 which I have signed,” he said. Fred Itua further emphasized the governor’s commitment to development projects in the state.
The governor assured that more projects would be undertaken, saying, “Edo people should expect more projects.” With the completion of the sub-station, the communities will soon enjoy uninterrupted electricity supply, boosting economic activities and improving the overall quality of life.
Energy
NIGERIA FACES LEGAL TROUBLE OVER MAMBILLA POWER PROJECT AS OBASANJO AND BUHARI GIVE CONFLICTING TESTIMONIES
Nigeria’s defense in the long-standing legal battle over the $6 billion Mambilla Power Project has been dealt a significant blow after former Presidents Olusegun Obasanjo and Muhammadu Buhari gave conflicting testimonies before the International Chamber of Commerce (ICC) Court of Arbitration in Paris. The contradictory accounts have raised serious questions about Nigeria’s defense strategy, potentially jeopardizing the country’s chances of avoiding a hefty $2.3 billion compensation claim by Sunrise Power and Transmission Company.
Agunloye
Obasanjo testified on January 22, 2025, dismissing the legitimacy of the 2003 contract, arguing that it was illegally signed by the then Minister of Power, Olu Agunloye, despite the Federal Executive Council (FEC) rejecting it. “The agreement relied on by Sunrise Power was never valid. A minister cannot single-handedly approve a contract after the Federal Executive Council had rejected it,” Obasanjo declared.
Malami & Fashola
However, Buhari’s testimony on January 23, 2025, provided a starkly different narrative, admitting that his administration had recognized and engaged with Sunrise Power over the contract. “I directed the Attorney General, Abubakar Malami (SAN), and the Minister of Works and Power, Babatunde Fashola (SAN), to negotiate with Sunrise Power,” he stated. Buhari’s admission has inadvertently strengthened Sunrise Power’s claim, suggesting that successive administrations recognized the contract, even if it was initially disputed.
The contradictory testimonies have put Nigeria’s legal team in a difficult position. If Buhari’s admission is considered valid, it could be interpreted as an official acknowledgment of the contract’s legitimacy, making it harder for Nigeria to argue against paying the $2.3 billion compensation. With the case nearing its final stages at the ICC, legal experts believe Nigeria faces an uphill battle in proving its innocence.
President Bola Ahmed Tinubu has appointed Abba Abubakar Aliyu as the substantive Managing Director of the Rural Electrification Agency (REA). The appointment, which takes effect from January 23, 2025, is for an initial term of four years.
Special Adviser to the President, Bayo Onanuga, in a statement, noted that Aliyu has been acting as the agency’s managing director since March 2024. Onanuga stated that Aliyu brings over 20 years of experience in energy and organizational development in the private and public sectors to his new role. Aliyu has played key leadership roles in the on-grid and off-grid power sectors, as well as the water resources and transportation sectors of Nigeria’s economy.
Previously, Aliyu served as head of the Project Management Unit at the Nigeria Electrification Project; General Manager of Corporate Services, Projects, and Research, and Deputy General Manager at Nigeria Bulk Electricity Trading PLC (NBET). Onanuga added that President Tinubu anticipates that Aliyu will leverage his extensive expertise to further the REA’s mission of providing rural communities with reliable electric power and contributing to the administration’s Renewed Hope Agenda on sustainable energy and power. Onanuga concluded by stating that the appointment is a significant step towards achieving the administration’s goals in the energy sector.