NNPC NUPRC financial squeeze
The Nigerian National Petroleum Company Limited (NNPC) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) are facing mounting concerns over a major fiscal reform initiated by President Bola Tinubu, with both agencies reportedly apprehensive about potential financial squeeze and operational disruption following a presidential directive that alters how oil and gas revenues are managed and remitted. 
The reform, which took effect in mid-February, mandates that all oil and gas revenues — including taxes, royalties, profit oil and gas — be directly remitted into the Federation Account, instead of being deducted and retained by the NNPC and other sector agencies as had been standard practice under the Petroleum Industry Act (PIA) and previous fiscal arrangements. 
The shift has sparked anxiety within both NNPC and NUPRC circles, where officials fear the policy could restrict their revenue streams, complicate ongoing contracts, and undermine financial stability. 
What Tinubu’s order changed
President Tinubu’s executive order on direct remittance of oil revenues aims to strengthen transparency and fiscal discipline in Nigeria’s oil and gas sector. It eliminates longstanding deductions that allowed NNPC to retain large portions of earnings for management fees and frontier exploration. 
Under the new arrangement:
• NNPC can no longer collect and manage 30 percent profit-based management fees under Production Sharing Contracts (PSCs). 
• The 30 percent Frontier Exploration Fund retained by NNPC under PSCs and similar contracts is now to be paid directly to the Federation Account. 
• Royalty oil, tax oil, profit oil and profit gas, and other revenue streams that previously formed the basis for deductions are now remitted without reductions directly to the Federation Account for distribution. 
• Proceeds from gas flaring penalties previously paid into the Midstream and Downstream Gas Infrastructure Fund are also redirected to the Federation Account. 
Revenue previously held as reserves by NNPC and regulatory agencies has, in effect, been centralised within the federal fiscal framework — a move designed to ensure that public funds flow transparently into a common pool before being shared by all tiers of government. 
Why NNPC and NUPRC fear a financial squeeze
While the Tinubu order’s broader goal is to shore up government revenue flows and strengthen fiscal discipline, NNPC and NUPRC officials have raised concerns about how the changes may affect their internal financing and ongoing operations:
- Loss of direct revenue access
Before the reform, NNPC and NUPRC collected specific revenue lines directly, which helped finance core activities, operational costs, and strategic projects. Under the new framework, those revenue streams go straight into the Federation Account, limiting the agencies’ autonomous cash inflows. 
NNPC officials have indicated the shift could disrupt production sharing contract obligations, staff deployment, and long-term planning, especially in deepwater and frontier exploration projects that depend on predictable internal funding. 
- Impact on NUPRC revenue
The NUPRC, historically funded largely by upstream revenues such as royalty and tax oil, also faces uncertainty about how the new remittance rules will affect its ability to finance regulatory activities, including monitoring compliance, licensing, and supporting development initiatives. 
Officials fear that reliance on the federal budget — rather than direct remittances — may make planning and execution more challenging and could reduce regulatory influence at a time when upstream activity requires strong oversight.
- Worker and union concerns
Labour groups within the petroleum sector have echoed these institutional fears.
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has warned that the order could jeopardise jobs and operational funding if NNPC’s revenue base shrinks significantly, arguing that executive directives should not override established statutory financial powers under the Petroleum Industry Act. 
Similarly, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has called for a stakeholder meeting to clarify the executive order’s implications for employment, labour agreements, and operational continuity. 
https://ogelenews.ng/nnpc-nuprc-financial-squeeze-tinubu-order
Broader debate: reform vs institutional autonomy
The reform has produced contrasting views among experts and industry stakeholders:
Support for greater transparency
Proponents argue that directing all oil and gas revenues into a single account enhances transparency, accountability, and equitable distribution among federal, state, and local governments. They see the move as a way to curb leakages and improve macroeconomic management. 
Many industry observers also point out that under the old framework, multiple deductions and fees significantly reduced net oil inflows to the Federation Account. Centralising revenues should strengthen federal fiscal capacity and increase predictable revenue for public services and development projects. 
Concerns about statutory and legal standing
Critics, including legal experts, assert that substantive changes to revenue governance may require legislative action rather than executive order because the Petroleum Industry Act already provides the legal basis for revenue deductions and allocations. They caution that using executive directives to alter statutory frameworks could create legal uncertainty and affect investor confidence. 
For example, some analysts point out that while executive powers allow for enforcement and implementation, they do not inherently allow for altering provisions established by law without legislative amendment.
What this means for Nigeria’s oil sector
The reform marks one of the most significant shifts in Nigeria’s petroleum revenue governance in years. It clearly signals President Tinubu’s intention to tighten fiscal control, reduce revenue leakages, and restore constitutional entitlements for all levels of government. 
However, the potential financial squeeze on NNPC and NUPRC underscores the complexity of balancing enhanced transparency with institutional viability.
As implementation proceeds, attention is likely to turn to:
• how NNPC adjusts to the new revenue model
• whether statutory reforms to the Petroleum Industry Act will be pursued
• clarity on funding mechanisms for regulatory agencies
• labour and operational stability within the sector
Whether the reform ultimately strengthens Nigeria’s oil governance or precipitates short-term operational challenges will depend on execution, legislative responses, and stakeholder engagement over the coming months.
https://punchng.com/nnpc-nuprc-fear-financial-squeeze-after-tinubus-order
