Key points
- The federation account received N180.04 billion in Production Sharing Contracts (PSC) profit oil from NNPC in the first quarter of 2026.
- Monthly remittances fluctuated from N16.06 billion in January to a peak of N121.34 billion in February, followed by N42.63 billion in March.
- Remittances moved to a 100 percent profit oil payment model in February following President Bola Tinubu’s Executive Order 9.
- Total Q1 2026 remittances fell 59 percent year-on-year, dropping from N438 billion in Q1 2025.
- NNPC recorded zero dividend payments to the federation account for the first three months of 2026, missing an N813.55 billion target.
Main Story
The federation account received a total of N180.04 billion as production sharing contracts (PSCs) profit oil from the Nigerian National Petroleum Company (NNPC) in the three months of 2026.
Data from the NNPC oil and gas revenue distribution report presented to the Federation Account Allocation Committee (FAAC) showed that the federation received N16.06 billion in January, N121.34 billion in February, and N42.63 billion in March.
The report indicated that the federation began receiving 100 percent of PSC profit oil payments following President Bola Tinubu’s Executive Order 9, shifting away from the Petroleum Industry Act (PIA) 30:30:40 formula used in January.
Despite the policy change, the cumulative Q1 remittance of N180.04 billion fell significantly below the year-to-date budget target of N592.10 billion, resulting in a negative variance of N412.053 billion.
Furthermore, total remittances declined by approximately 59 percent compared to the N438 billion recorded in Q1 2025. Adding to the fiscal shortfall, the report disclosed that no remittances were made under the “NNPC Ltd Calendarised Interim Dividend to Federation Account” for the entire quarter, missing the budgeted monthly target of N271.18 billion.
Consequently, total distributions for Q1 stood at N180.04 billion against a budgeted target of N1.40 trillion.
The Issues
- The 59 percent year-on-year decline in PSC remittances suggests that even with a 100 percent payment model, underlying production or price factors are severely impacting revenue.
- The total shortfall of N1.22 trillion in expected distributions places immense pressure on the three tiers of government to fund their 2026 budgets.
- Zero dividend payments from NNPC Ltd raise questions about the company’s current liquidity and operational costs amidst its transition to a commercial entity.
What’s Being Said
- “From February 2026, PSC distribution is in compliance with Executive Order 9 2026,” according to the NNPC revenue distribution report.
- Regarding the policy shift, the document noted that the January distribution was based on the “PIA formula of 30:30:40 before the policy change took effect the following month.”
- President Tinubu’s executive order requires that “royalty oil, tax oil, profit oil, profit gas, and other government entitlements be paid directly into the federation account.”
- The report highlights a “negative variance of N412.053 billion” for PSC profit oil against the year-to-date budget target.
What’s Next
- FAAC members are expected to seek clarification from the NNPC management regarding the total absence of interim dividend payments in Q1.
- Financial analysts will monitor April and May production figures to see if the revenue dip is a temporary technical issue or a systemic decline in oil output.
- The Federal Government may review the implementation of Executive Order 9 to ensure all redirected revenue streams are hitting the federation account as intended.
Bottom Line While Executive Order 9 has successfully redirected 100 percent of PSC profit oil to the federation, the massive shortfall in NNPC dividends and a 59 percent drop in total revenue have left the federation account with a N1.22 trillion deficit for the start of 2026.
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