Deductions from Nigeria's Federation Account declined to 8.4 trillion naira in the first half of 2026, down from 10.1 trillion naira in the same period of 2025, the World Bank said. The reduction of 1.7 trillion naira, or 16.8 per cent year-on-year, followed Executive Order 9 signed by President Bola Tinubu on February 13, which ended the Nigerian National Petroleum Company Limited's 30 per cent management fee and Frontier Exploration Fund deductions from profit oil and profit gas. The order also redirected gas-flaring penalties to the Federation Account instead of the Midstream and Downstream Gas Infrastructure Fund.
As a share of the nation's gross domestic product, deductions fell from 4.6 per cent to 3.4 per cent, a decline of 1.2 percentage points. The World Bank said the reduction helped increase distributed Federation Account revenues from 7.6 trillion naira in the first half of 2025 to 10.5 trillion naira in the first half of 2026, an increase of 2.9 trillion naira, or 38.2 per cent.
The Tinubu administration said the previous arrangements reduced revenue available to the Federation and created overlapping funding mechanisms. The reforms aim to increase transparency in petroleum revenue collection and improve funds available for distribution to the three tiers of government. However, questions remain about how affected agencies and funds will finance their statutory responsibilities under the revised arrangements.