Executive Order and the Risk of Unraveling Nigeria’s Oil Sector Reforms

Nigeria’s oil and gas industry stands at another pivotal moment. Barely three years after the Petroleum Industry Act (PIA) was enacted to stabilise and commercialise the sector, a new Executive Order has reopened fundamental questions about financial autonomy, investor confidence and the long-term sustainability of our national oil company.

At the heart of the debate is the directive mandating the direct remittance of major oil and gas revenues into the Federation Account. 

On the surface, the move appears fiscally prudent. In a period of revenue pressures and economic strain, ensuring immediate cash flow to federal, state and local governments is understandably attractive. However, public finance gains must be carefully weighed against long-term sectoral stability. 

The PIA was designed as a structural reset. One of its core objectives was to transform NNPC Limited into a commercially viable and globally competitive energy company. To achieve that, the law granted the company defined revenue-retention mechanisms, including a 30 per cent management fee and allocation of 30 per cent of profit oil and gas for frontier exploration before remittance of balance revenues to government. 

These provisions were not arbitrary privileges. They were strategic financial tools intended to ensure reinvestment, strengthen upstream capacity, expand gas infrastructure and position Nigeria to compete for global capital in an increasingly competitive energy market.

By reversing those retention mechanisms, the new Executive Order significantly reduces the internally generated funds available to NNPC Limited. Estimates suggest that under the original PIA framework, the company could have retained roughly $45 billion over five years under moderate production and price assumptions. Under the new directive, that figure could decline to approximately $15 billion — a potential $30 billion reduction in investable capital. 

This is not a minor technical adjustment. It represents a fundamental alteration of the financial architecture underpinning post-PIA reforms. 

Oil and gas development is capital-intensive. Annual investment requirements are typically in the range of $8–10 billion to sustain production levels, execute upstream projects and develop gas infrastructure. If internal retention falls sharply, the company may be compelled to increase external borrowing to finance capital expenditure. 

That path carries its own risks. Higher borrowing means greater debt servicing obligations, increased exposure to oil price volatility and potential downgrades in credit perception. In an industry already navigating global energy transition pressures, regulatory shifts and geopolitical uncertainty, additional financial strain could weaken competitiveness.

There are also implications beyond balance sheets. Frontier basin exploration could slow. Project timelines may be delayed. Investor confidence — carefully rebuilt after decades of regulatory instability — could be shaken once again. International investors seek predictability. 

 Frequent policy reversals send the opposite signal.
Supporters of the Executive Order argue that it enhances fiscal transparency and ensures oil revenues are immediately available for public expenditure. That argument deserves consideration. 

 Governments must fund infrastructure, social services and development priorities. Yet the sustainability of those revenues depends on the health of the producing entity. A weakened NNPC Limited may ultimately generate less, not more, for the Federation. 

There is also a constitutional dimension worth examining. The PIA is an Act of the National Assembly. Whether substantive fiscal adjustments of this magnitude can be effectively implemented through executive action alone is a question that policymakers and legal experts must address carefully to avoid future disputes.
Nigeria’s oil sector has endured decades of uncertainty.

 The PIA was meant to close that chapter. Introducing major fiscal shifts so soon after its passage risks reopening instability at a time when stability is desperately needed. 

This is not an argument against reform or transparency. It is an argument for coherence, dialogue and strategic consistency. Policymakers, legislators and industry leaders must engage constructively to ensure that short-term fiscal objectives do not compromise long-term sector viability.

Nigeria cannot afford to weaken the very institution expected to anchor its energy future. The challenge is not merely about revenue remittance; it is about safeguarding the financial foundation upon which sustainable oil and gas development depends. 

By: Richard Akinfele

Richard Akinfele, is a Lagos-based oil industry analyst.

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