The Federal Government has approved a transition period for the implementation of direct payments by oil contractors into the Federation Account under Executive Order 9 of 2026 issued by President Bola Ahmed Tinubu.

The measure is aimed at strengthening the management of petroleum revenues and safeguarding public funds.

The decision was taken by the implementation committee for the executive order following its inaugural meeting held on February 26, 2026.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who chairs the committee, in a statement said the transition period would ensure that the new payment system is introduced without disrupting existing contractual and financing arrangements in the oil sector.

The policy follows the directive by President Tinubu that revenues from petroleum operations should be managed in a manner that protects public funds and strengthens the finances of the three tiers of government.

The executive order mandates that payments such as profit oil, royalty oil and tax oil be made directly into the Federation Account.

According to Edun, the committee agreed that the transition to the new system must be implemented carefully to preserve investor confidence while ensuring government revenues are protected.

“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 had approved a defined transition period before the full operationalisation of the new remittance system.

“For this reason, the Committee approved a defined transition period for the operationalisation of direct payments by contractors of profit oil, royalty oil and tax oil into the Federation Account,” Edun said.

During the transition period, existing payment arrangements will remain in place until detailed operational guidelines are released.

“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,” he explained.

To facilitate implementation, the committee also approved the establishment of a technical subcommittee to develop the operational framework for the transition.

Edun said the subcommittee has been given three weeks to produce detailed guidelines for the new remittance system.

The committee will also begin 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 said.

The subcommittee will be led by the Special Adviser to the President on Energy, Olu Verheijen, and will include senior officials from key government institutions.

Members include 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, and representatives of the Minister of State for Petroleum Resources (Oil).

The Budget Office of the Federation will serve as the secretariat of the subcommittee.

According to the implementation committee, the reforms are intended to ensure that revenues from Nigeria’s oil and gas sector are properly accounted for and paid into the Federation Account in line with constitutional provisions.

The committee also reiterated the directive of President Tinubu that revenues from petroleum operations must be managed in a way that protects public funds and supports fiscal stability across the federal, state and local governments.

As part of the measures introduced under Executive Order 9, the government has directed NNPC Limited to discontinue certain deductions related to production sharing contracts.

Under the directive, the national oil company will stop 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, remittances of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund have also been suspended with immediate effect.

The implementation committee said it will continue to provide guidance and updates as work on the new system progresses.