FG Approves Transition Period for Direct Oil Payments Into Federation Account
By Patience Ikpeme
The Federal Government has approved a transition period for the implementation of direct payments by oil contractors into the Federation Account.
This move follows the recent Executive Order 9 issued by President Bola Ahmed Tinubu, which aims to improve how petroleum money is managed and to keep public funds safe.
The decision was made by the Implementation Committee for Executive Order 9 of 2026 during its first meeting on February 26, 2026. In a statement released on Monday by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, the government explained that this waiting period is necessary so the new system can start without breaking existing contracts or upsetting investors in the oil sector.
According to Mr. Edun, who chairs the committee, the goal is to make sure that payments like profit oil, royalty oil, and tax oil go straight into the Federation Account. However, he noted that the shift must be handled with care.
“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,” Mr. Edun said.
For now, oil contractors will continue to pay money the way they have been doing until the government finishes writing the new rules.
“Until the Committee issues detailed guidelines, contractors will continue to remit under the current process. During the transition period, the Committee will issue clear, standardised guidance to ensure an orderly changeover,” the Minister added.
To speed things up, a special technical subcommittee has been given three weeks to create the final framework for these direct payments. This group, led by the Special Adviser to the President on Energy, Mrs. Olu Verheijen, will also review the Petroleum Industry Act (PIA) to fix any problems that are making the government lose revenue.
“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,” Mr. Edun noted.
In the meantime, some changes have started immediately. The NNPC Limited has been told to stop taking a 30% management fee and a 30% frontier exploration fund from oil profits under certain contracts. Also, money from gas flare penalties will no longer be paid into the Midstream and Downstream Gas Infrastructure Fund for the time being.
The committee stated that these reforms are part of President Tinubu’s plan to make sure Nigeria’s oil wealth leads to real, visible benefits for all citizens.
