President Bola Ahmed Tinubu has issued what may become one of the most consequential fiscal directives of his administration. By executive order, he has directed that royalty oil, taxes on oil, profits from oil, profits from gas, and all earnings under production sharing, profit sharing and risk service contracts be paid directly into the federation account.

On its face, the executive order promises a windfall. Based on 2025 revenue data submitted to the Federation Account Allocation Committee, FAAC, energy analysts estimate that as much as N14.7 trillion could now flow annually into the federation account. Oil and gas royalties of N7.55 trillion and gas flaring penalties of N611.42 billion collected by the Nigerian Upstream Petroleum Regulatory Commission would be remitted directly to the federation account.

Petroleum taxes of N4.905 trillion, previously administered by the Nigeria Revenue Service, would be remitted directly. About N596.61 billion from the Midstream and Downstream Gas Infrastructure Fund would also be subject to statutory allocation rules. The executive order also abolishes two major retention mechanisms.

One, it scraps the 30 per cent Frontier Exploration Fund created under the Petroleum Industry Act, 2021; and second, it ends the 30 per cent management fee on profit oil and gas previously retained by the Nigerian National Petroleum Company Limited. The President says excessive deductions and overlapping funds have weakened remittances and slowed development.

He frames the directive as a reform for fiscal discipline and transparency. States and local governments, long starved of revenue, are understandably enthusiastic. More money in the federation account means higher allocations under the constitutional sharing formula.

But good intentions do not cure assumed legislative defects.

The real question is not whether more money will flow to the federation account. The question is whether the president can lawfully do what he has done.

The short answer is no.

The legal architecture of Nigeria’s petroleum sector is not framed by executive policy. It is a statutory framework. The Petroleum Industry Act restructured the industry after years of debate. It created regulators, defined revenue streams, established funds, and specified how proceeds are to be treated. In doing so, it created a delicate balance between commercial viability, regulatory independence, and fiscal federalism.

Section 3 of the Act provides that the Minister of Petroleum has powers to formulate, monitor, and administer government policy in the petroleum industry. President Tinubu currently holds the portfolio of Minister of Petroleum. He, therefore, wears two hats. He is the president under Section 5 of the Constitution, which vests executive powers in him. He is also a minister under Section 147, with executive responsibilities assigned under Section 148.

The problem arises when these roles are blurred.

An executive order is an instrument through which the president exercises constitutional power. It is not legislation. It cannot amend legislation. It cannot override an act of the National Assembly. Section 5 of the Constitution is clear that executive power is exercised subject to the provisions of the Constitution and any law made by the National Assembly.

Executive power is not superior to statute. It is subject to it. Section 3 of the Petroleum Industry Act empowers the Minister to formulate policy. Policy is not law. Policy operates within the framework of law. A Minister can’t, by policy instrument, contradict or nullify express provisions of the Act. If the Act creates a Frontier Exploration Fund and stipulates that 30 per cent of certain proceeds be deducted for that purpose, the Minister cannot, by executive fiat, abolish that deduction. Only the National Assembly can amend or repeal that statutory provision.

The President may argue that he is not amending the Act but merely directing that all government revenues be paid into the federation account in line with constitutional requirements. That argument collapses on scrutiny. The Act itself provides for specific retention structures. Since its implementation, only 40 per cent of proceeds from production-sharing contracts have been paid into the federation account, with the remaining 60 per cent retained by NNPC for frontier exploration and management fees, as allowed by law. The Act deliberately crafted that arrangement.

If an executive order now requires that 100 per cent be paid into the federation account, it is not implementing the Act. It is being altered by presidential rascality. Some defenders of the executive order may argue that, as the president is also the minister of petroleum, he may exercise his ministerial powers through a presidential executive order.

That conflates offices that the Constitution deliberately distinguishes. Section 147 creates the office of Minister. Section 148 allows the President to assign responsibilities to Ministers. A minister exercises statutory powers granted by an act. A president exercises constitutional executive power. When the president acts as minister under the Petroleum Industry Act, he is bound by the limits of that Act. He cannot use the broader aura of presidential authority to stretch ministerial powers beyond statutory confines.

The distinction is not esoteric. It goes to the heart of the separation of powers.

Now, let’s consider the agencies affected. The laws establishing them specifically allow certain revenues to be retained for defined purposes, while requiring a large chunk to be paid into the federation account. Those retention mechanisms were not accidental. They were part of the oil industry reform architecture designed to insulate sector funding from political volatility and ensure reinvestment in infrastructure, exploration and regulation.

If the President believes those structures are inefficient or abused, the remedy is legislative amendment. He has already announced a broader review of the Petroleum Industry Act. That is the proper route. What he cannot do is short-circuit the legislature through a reckless executive order.

The constitutional implications are stark. Section 5 does not confer legislative authority on the president. The Supreme Court has affirmed that executive action must conform to statute. An executive order that contradicts an act is void to the extent of inconsistency. It cannot stand. Beyond legality lies a deeper policy irony. Proponents say the measure will enhance accountability by increasing the flow of funds into the federation account. But the federation account is not a transparent tube. It is a distribution mechanism. Funds paid into it are shared among the federal, state and local governments. Will the executive order improve accountability? Or will it simply increase the quantum of resources available to the president and governors?

A lingering suspicion cannot be ignored. With the 2027 presidential election now barely a year away, some observers wonder whether the timing of this executive order is purely coincidental. By redirecting vast oil and gas revenues straight into the federation account, the policy significantly enlarges the pool of funds available to the federal and state governments, and more particularly state governments whose political structures remain central to electoral heists.

In Nigeria’s political reality, governors are not merely subnational administrators. They are power brokers who command party machinery, influence voting logistics, and shape voting outcomes within their states. When an executive order dramatically increases their fiscal inflows on the eve of a national election cycle, it is inevitable that questions will arise about motive and method.

Even if the order is defended as a fiscal correction, the proximity to the electoral calendar invites scrutiny. Public trust demands that an executive order of this nature be insulated from the appearance of partisan advantage, particularly in a country where incumbency already confers enormous electoral leverage.

Nigeria’s fiscal history is sobering. For decades, substantial allocations have flowed to states. Many remain indebted, with poor, opaque infrastructure and financial management. If funds are legally due to the federation account under the Act, then their remittance is proper and unavoidable, regardless of what governors do with them.

But if funds are being steered there in contravention of statutory design, merely to increase allocations, that is another matter. It is not a defence of illegality to say that governors might loot the money anyway. That argument trivialises constitutional order. The rule of law does not bend to cynicism.

Indeed, if anything, Nigeria’s recent history teaches the opposite lesson. The chronic problem of subnational corruption is precisely why constitutional guardrails must be respected, not weakened. For more than two decades, anti-corruption agencies have prosecuted former governors for diversion of public funds on a scale that defies imagination.

The case of James Ibori remains emblematic. After leaving office as Governor of Delta State, he was convicted in the United Kingdom for money laundering involving tens of millions of pounds traced to public resources. His prosecution exposed a pattern that Nigerians had long suspected: that vast allocations from the federation account can disappear into private accounts, luxury properties and offshore vehicles when oversight collapses.

The story is not isolated. Joshua Dariye, a former governor of Plateau State, was convicted of diverting ecological funds intended for his state. Jolly Nyame, Governor of Taraba State, was also convicted for misappropriating state resources. In Abia State, Orji Uzor Kalu faced conviction over the diversion of public funds, though later legal proceedings complicated the outcome. In Adamawa State, Murtala Nyako was accused of diverting billions of naira belonging to the state. In Bayelsa, the name of Diepreye Alamieyeseigha became synonymous with the early era of gubernatorial corruption allegations, culminating in conviction and forfeitures.

These are not rumours whispered in beer parlours. They are matters of public record. Charges were filed. Trials were conducted. Judgments were delivered. Assets were seized. In some cases, funds were repatriated from foreign jurisdictions after painstaking international cooperation.

The pattern is painfully familiar. Large monthly allocations flow from the federation account. State budgets balloon. Infrastructure remains skeletal. Civil servants are owed salaries. Pensioners protest. Meanwhile, investigative agencies later uncover properties in Dubai, London, or Abuja purchased through shell companies linked to public officials. Even where convictions have not been secured, allegations have abounded.

Former governors across party lines have faced investigations for inflated contracts, diversion of security votes, and opaque handling of internally generated revenue. The point is not to rehearse every indictment. It is to underline the painful reality. The federation account is not an accountability filter. It is a conduit. Once funds are shared with states, oversight largely falls to state houses of assembly controlled by governors.

This context matters when evaluating the present executive order. If funds are lawfully due to the federation account under existing statute, then their remittance is mandatory. Constitutional distribution must follow.

But if funds are redirected there in a manner that sidesteps statutory structures merely to increase the volume available for allocation, one must ask what structural accountability gains have been achieved.

Will governors suddenly become more transparent because allocations increase? Will state procurement processes become more rigorous? Will state houses of assembly exercise greater independence? There is little empirical basis for such optimism.

The experience of the past twenty-five years suggests that without institutional reform at the sub-national level, increased inflows often expand the space for discretion rather than discipline. Even at the federal level, where the national assembly has become a rubber stamp, there’s no assurance that the president will exercise discipline in the use of public resources.

Welcome to the open sesame for looting and the negation of some of the retention mechanisms targeted by the executive order that were designed to ring-fence funds for sector-specific purposes. The Frontier Exploration Fund under the Petroleum Industry Act, whatever its critics may say about efficiency, was created by law to finance exploration in underdeveloped basins.

Management fees retained by sector entities were embedded in a statutory framework meant to sustain operations and investment. If those structures are imperfect, they require legislative correction. Not presidential alteration of the law.

There is also a moral hazard. When political leaders observe that statutory schemes can be altered unilaterally in the name of expediency, it signals that the process is negotiable. Today, the justification is higher remittance. Tomorrow it may be another urgent objective. Over time, constitutional discipline erodes. Nigeria’s anti-corruption journey has shown that post-facto prosecution is arduous and uncertain. Trials stretch for years. Appeals overturn convictions on technical grounds.

Plea bargains reduce penalties. Asset recovery is partial. The lesson is not despair. The lesson is prevention. Strong legal frameworks, clear separation of powers and respect for statutory design are preventive tools. They reduce opportunities for abuse before they metastasise.

To be clear, the argument here is not that sector agencies should operate as fiefdoms, shielded from scrutiny. Transparency in oil and gas revenue is imperative. Leakages must be plugged. But reform must occur within constitutional boundaries.

If the National Assembly determines that the Frontier Exploration Fund is wasteful, it can amend or repeal the relevant provisions of the Petroleum Industry Act. If management fees are excessive, lawmakers can remedy them. That process invites debate and public accountability, which will inevitably provide assurances to stakeholders and investors. Anything short of this will place petroleum sector investments at risk.

By contrast, an executive order that effectively rewrites statutory revenue flows concentrates power in one branch. It substitutes administrative fiat for legislative deliberation. Even if motivated by a desire to increase allocations to states, it raises the uncomfortable possibility that funds are being re-channelled without the procedural safeguards that the Constitution demands.

The history of gubernatorial corruption should caution us against simplistic fiscal arithmetic. More money in the federation account does not automatically mean more schools, hospitals or roads. Without institutional reforms at both the national and subnational levels, it may simply mean larger budgets managed under the same opaque practices that have led to past prosecutions. That is why legality cannot be treated as a secondary concern.

The Constitution is not an inconvenience to be navigated around in pursuit of revenue optimisation. It is the framework that protects public resources from arbitrary control. If Nigeria is to break the cycle of looting and late-stage accountability, it must strengthen institutions at every level. It must insist that the Executive obey statutes. It must require the Legislature to amend laws openly where reform is needed. And it must demand that states improve transparency in budgeting and spending. Shortcuts, even well-intentioned ones, do not build durable governance.

The Petroleum Industry Act was the product of long negotiations aimed at restoring investor confidence after years of uncertainty. Production sharing contracts and fiscal terms were redesigned. Retention mechanisms were embedded in that settlement. If the executive branch can alter revenue flows by order, investors will ask what else it can alter without legislative process. 

As I have already warned, aspects of the executive order may conflict with existing statutory provisions, and to ensure constitutional alignment and sustain investor confidence, appropriate legislative amendments may be required. That warning should not be dismissed. None of this is to deny the fiscal pressures confronting the country.

States are struggling. The federal government seeks discipline in remittances. There may well be merit in revisiting the Frontier Exploration Fund or management fee structures. But merit does not confer legality. If the President believes that 30 per cent deductions for frontier exploration are excessive, he should present an amendment bill to the National Assembly. If he believes that NNPC’s retained management fees distort remittances, he should seek statutory rectification. That path is slower. It requires debate. It requires votes. It requires persuasion. But it respects constitutional order. An executive order that effectively amends an Act is an overreach, even when wrapped in reformist language.

Nigeria’s constitutional democracy rests on boundaries. The National Assembly makes laws. The executive implements them. Ministers exercise powers granted by statute. The President cannot, by invoking Section 5, dissolve those lines. In moments of fiscal urgency, it is tempting to celebrate boldness.

But constitutional fidelity is not an obstacle to reform. It is its foundation. The oil and gas sector has suffered from opacity and leakage. Reform is needed. Transparency is needed. Discipline is needed. But reform achieved by ignoring statutory architecture may cure one problem and create another.

This is not merely about N14.7 trillion. It is about whether the President can override the National Assembly in the name of efficiency. It is about whether statutory funds created by law can be extinguished by executive order. It is about whether the President, even when wearing the hat of Minister, can legislate by proclamation.

The answer, if the Constitution means what it says, is clear.

He cannot.

Abdul Mahmud, a human rights attorney in Abuja, writes weekly for The Gazette