FederationRevenue from the Nigerian National Petroleum Company Limited’s Production Sharing Contract profit sharing decreased by N78.71bn in March 2026, even though there was a significant increase in global crude oil prices during the month, according to an examination of NNPC reports shared at Federation Account Allocation Committee meetings.
The reports, acquired by Sunday PUNCH, revealed that the PSC’s total allocation to the Federation Account decreased from N121.34bn in February 2026 to N42.64bn in March 2026, marking a 64.9 per cent drop compared to the previous month. The March 2026 amount was also much lower than the N204.96bn noted in March 2025, showing a year-over-year decrease of N162.33bn or 79.2 per cent.
The drop occurred even as global crude oil prices increased in March 2026, fueled by growing political conflicts in the Middle East and worries about interruptions in worldwide oil transportation routes.
As per the US Energy Information Administration, Brent crude oil prices increased significantly in the first quarter of 2026, surpassing $100 per barrel on March 12 and ending the quarter at approximately $118 per barrel due to renewed military conflicts in the Middle East and concerns about the Strait of Hormuz.
Nevertheless, the increased prices did not result in higher Federation oil revenues from PSC payments.
Further examination of the reports revealed that the overall PSC allocation in the first quarter of 2026 was N180.05bn, as opposed to N438.54bn during the same period in 2025, showing a year-over-year decrease of N258.49bn or 58.9 per cent. The Q1 2026 amount also failed to meet the N592.10bn forecasted budget by N412.05bn.
Sunday PUNCH also noted that the PSC allocation dropped from N105.91bn in January 2025 to N16.07bn in January 2026. In February, income fell from N127.67bn in 2025 to N121.34bn in 2026, then decreased even more to N42.64bn in March 2026 compared to N204.96bn in March 2025.
The findings also highlighted a significant transformation in the distribution system after Executive Order 9 was issued by President Bola Tinubu in 2026.
Under the 2025 framework, PSC profits were distributed according to the 30:30:40 ratio outlined in the Petroleum Industry Act. Of the N438.54bn PSC profit recorded in Q1 2025, N131.56bn was subtracted as the NNPC management fee, an additional N131.56bn was set aside for frontier exploration funds, and only N175.42bn, which accounts for 40 percent of the total, was credited directly to the Federation Account as the Federation’s portion of the PSC.
This indicates that deductions related to NNPC amounted to N263.12 billion in the first quarter of 2025.
However, the 2026 report indicated that the Federation’s share of the PSC had increased to 100 percent, without any distinct deductions for NNPC management fees or frontier exploration. The report explicitly stated that “from February 2026, the distribution of PSC is in line with Executive Order 9 2026.”
Executive Order 9, issued by Tinubu in February 2026, requires that oil and gas revenues owed to the Federation be transferred directly into the Federation Account, reducing deductions and withholdings by organizations, and ensuring that major statutory inflows are fully paid prior to any expenditure or allocation.
The order removed the 30 percent Frontier Exploration Fund under the PIA and stopped the 30 percent management fee on profit oil and profit gas kept by the NNPC. Starting February 13, 2026, the directive aims to protect oil and gas revenues and enhance transfers to the Federation Account.
As per the directive, the President referred to Section 5 of the Constitution of the Federal Republic of Nigeria (as amended), based on Section 44(3), which grants the Government of the Federation ownership and management of all minerals, mineral oils, and natural gas.
Tinubu mentioned that excessive deductions, overlapping financial flows, and structural imbalances within the oil and gas industry have reduced transfers to the Federation Account, and he cautioned that such practices need to stop in order to safeguard national income.
“For too long, excessive deductions, overlapping funds, and structural imbalances within the oil and gas industry have undermined transfers to the Federation Account. When income intended for federal, state, and local governments gets stuck in multiple layers of fees and retention systems, progress is hindered. That needs to stop,” he stated on his verified X account.
Even with this adjustment, the Federation managed to generate just N180.05bn in overall PSC revenues during the first quarter of 2026.
This indicates that even though the Federation obtained the full PSC allocation in 2026, the increase was only N4.63bn compared to the N175.42bn direct Federation share received in Q1 2025 under the previous deduction system.
The data indicates that although the executive order removed NNPC deductions and raised the Federation’s share ratio from 40 percent to 100 percent, the core PSC revenue base significantly declined in 2026.
The reports also pointed out a significant discrepancy in dividend payments. For Q1 2025, NNPC estimated N230.88bn as the scheduled interim dividend to be sent to the Federation Account, but no real transfer was made. In Q1 2026, the estimated interim dividend increased substantially to N813.55bn, but actual payment was still not recorded.
Consequently, the total estimated oil and gas revenue anticipated from NNPC in Q1 2026 was N1.41tn, including PSC revenues and expected dividends. Nevertheless, the real inflows reached only N180.05bn, resulting in a significant gap of N1.23tn.
The information highlights new worries regarding output volumes, scheduling of crude withdrawals, cost recovery requirements, payment timelines, and overall effectiveness in the oil industry, particularly as global crude prices were experiencing a significant increase.
In an interview with Sunday PUNCH, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, stated that the effect of increased oil prices may not have completely shown up in national income due to the timing and processing delays in the oil industry.
“It’s still too soon because the processing times for all these exports, including receiving the funds, transferring them to the bank, and depositing them into the Federation Account, could take more than two months,” he stated.
Yusuf mentioned that the performance of oil revenue was not solely influenced by prices, emphasizing that the levels of crude oil production are also crucial.
“Revenue performance goes beyond oil prices. It also involves production levels. It’s only in recent times that we’ve started hearing that our production is approaching 1.8 million barrels per day. For a long period, we hadn’t reached that level,” he said.
The economist also pointed out that earlier forward crude sales agreements made by NNPC to generate money for refinery upgrades could also be restricting the direct flow of oil profits into government accounts.
“We had numerous forward sales during the previous administration at NNPC. We conducted forward sales to generate funds for refinery rehabilitation, amounting to nearly $2 billion. This implies that, over time, a portion of the crude oil sales has already been pledged to settle those obligations,” Yusuf stated.
As per his statement, this implies that not all income increases resulting from higher oil prices would instantly flow into the Federation Account.
“So not every revenue or unexpected gain is being received directly. Some will be allocated throughout the middle to cover responsibilities. Altogether, these factors explain why we are not witnessing the anticipated effect from developments in the oil market,” he added.
Provided by SyndiGate Media Inc.Syndigate.info).
