For decades, the Nigerian National Petroleum Company (NNPC) operated as something far more than Africa’s largest state oil producer. It was a sovereign cash machine, collecting royalties, siphoning management fees, sitting atop frontier exploration funds, and remitting to Abuja only what it chose, when it chose.
That arrangement ended on February 13, 2026, when President Bola Tinubu signed an executive order that, with the stroke of a pen, stripped NNPC of its most lucrative revenue levers and redirected billions of dollars in oil proceeds directly to the Federation Account.
The order is the most consequential restructuring of Nigeria’s petroleum revenue architecture since the Petroleum Industry Act of 2021. It eliminates NNPC’s entitlement to a 30 percent management fee on profit oil and profit gas from production sharing contracts, scraps the company’s control over the 30 percent Frontier Exploration Fund, and mandates that all royalty oil, tax oil, profit oil, and profit gas be remitted by contractors and operators directly to fiscal authorities, bypassing NNPC entirely.
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Nigeria’s Budget Office had earlier warned that the country was losing nearly 60 percent of its gross oil revenue to deductions under the PIA, allocating 30 percent to NNPC as management fees and another 30 percent to the Frontier Exploration Fund. The presidency said these deductions far exceeded global standards, diverting over two-thirds of potential remittances to the federation account.
For a government wrestling with mounting debt obligations and infrastructure deficits, the logic of reclaiming those flows is compelling.
For NNPC, it is an existential reckoning, one that leaves the company with a binary choice it can no longer defer: reinvent under market discipline, or slowly drown in institutional irrelevance.
The cash flow problem
The immediate threat is operational. Muda Yusuf, founder of the Centre for the Promotion of Private Enterprise and former Director-General of the Lagos Chamber of Commerce and Industry, warned that the stripped flows were not peripheral income; they were load-bearing pillars of NNPC’s financial architecture.
“There are ongoing obligations to vendors, to investors… Now that these revenue streams have been taken away, it may also have implications for the capacity or ability of NNPC to continue to function the way it has been functioning,” Yusuf said.
BusinessDay’s findings show NNPC carries significant operational commitments, joint venture cash calls, upstream capital expenditure, supply obligations, and vendor contracts stretching across Nigeria’s complex petroleum value chain.
These were previously funded, in part, by the very revenue streams Tinubu has now redirected. One analyst warned that the order may force NNPC to increase external borrowing to finance capital expenditure and that a weakened NNPC may ultimately generate less, not more, for the federation.
Yusuf also cautioned against subjecting NNPC to Nigeria’s envelope budgeting system, describing it as bureaucratic and prone to delays that would cripple a company needing to move at the speed of commercial markets.
“We don’t want to subject NNPC to this envelope system, which has been characterised by all manner of delays, bureaucracy, and all of that,” he said.
The warning carries particular weight given NNPC’s existing financing arrangements. The company is simultaneously navigating a proposed crude-backed forward-sale loan from Saudi Aramco through a special purpose vehicle, a structure designed to settle earlier financing obligations while raising fresh capital. The arrangement underlines how far NNPC remains from the self-sustaining commercial model it publicly espouses.
Why the IPO is now indispensable
The revenue shock transforms what was once a legal obligation into a financial lifeline. Section 53(1) of the PIA mandated NNPC’s stock exchange listing within six months of incorporation, a provision that remains unimplemented years later, despite two earlier failed attempts in 2018 and 2023.
Bayo Ojulari, group CEO at NNPC has pledged a listing by 2028, eyeing London, New York, and Lagos simultaneously. The federal government approved the write-off of approximately $5 billion in NNPC debts in late 2025, comprising $1.42 billion in dollar-denominated liabilities and N5.57 trillion in naira obligations, to clean up the company’s balance sheet ahead of a potential offering.
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But the IPO’s value extends far beyond balance sheet optics. For NNPC, stripped of its guaranteed revenue flows, a successful public listing now represents the only credible pathway to self-financed growth. Without it, the company faces a future of chronic underfunding, mounting borrowing costs, and an inability to compete for the upstream capital its peers attract with ease.
“The IPO journey is by law. The PIA prescribes for NNPC to journey towards achieving IPO. It’s not an option for us,” Ojulari said at ADIPEC 2025 in Abu Dhabi, words that now carry far greater urgency than when he first spoke them.
Adedapo Segun, NNPC’s chief financial officer, has signalled that corporate governance restructuring is already underway. “We have a part now that is IPO-ready. We have management that is IPO-ready. We need to build an organisation that is IPO-ready,” he said at the Nigerian Oil and Gas Energy Week.
A successful listing would unlock access to institutional capital markets, impose the financial discipline of quarterly reporting and independent audits, and subject NNPC’s management to the investor scrutiny that has driven reform at comparable national oil companies worldwide.
Without this external accountability mechanism, analysts warn that governance improvements risk remaining performative.
What the Global Peers Show
The data from comparable state oil companies illustrates the scale of what is at stake, and how much ground NNPC has to close.
Saudi Aramco, the world’s most profitable energy company, posted net income of $106.2 billion in 2024, even after a decline from $121.3 billion the previous year. Its 2024 revenue reached $480.57 billion and it paid $124.2 billion in dividends, figures that dwarf the combined earnings of ExxonMobil, Chevron, Shell, TotalEnergies, and Petrobras.
Its partial IPO in 2019 raised $25.6 billion, the largest in history, while simultaneously forcing governance reforms that accelerated the company’s global competitiveness. Aramco’s market capitalisation currently stands at $1.67 trillion.
Brazil’s Petrobras, another partial privatisation success, posted net income of approximately $8 billion in 2024 despite global oil price volatility, leveraging its world-class pre-salt deepwater assets and the commercial discipline that came with public listing.
Malaysia’s Petronas similarly ranks among the most profitable state oil firms globally, each demonstrating that a national oil company can serve both commercial shareholders and sovereign objectives without sacrificing either.
“A successful NNPC IPO could unlock new funding and drive further governance improvements, as seen with Petrobras,” a senior energy analyst told BusinessDay. “Success will require deftly calibrated implementation, robust investor targeting, and solid fundamentals, as investors will be voting as much for potential as for capacity.”
Nigeria, by contrast, has dithered. Saudi Arabia is simultaneously maximising fossil fuel revenues and investing aggressively in alternatives, executing a dual pivot that requires the kind of institutional agility NNPC has never demonstrated.
While Riyadh lists subsidiaries, builds sovereign wealth, and deploys capital across energy value chains, Abuja is still debating whether to enforce a listing law passed four years ago.
Sink or Swim
The harder question is not whether NNPC can absorb this revenue shock, it is whether the company will use the pressure as a catalyst for genuine transformation or retreat into the institutional dysfunction that has historically insulated it from accountability.
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Analysts argue that meaningful transformation goes beyond fiscal restructuring. Separating ownership from management, installing an independent board with real authority, bringing in sector expertise at the executive level, and establishing hard key performance indicators are the structural prerequisites for a company that can credibly compete for global capital.
Ojulari’s appointment in April 2025, following 30 years at Shell, has been widely welcomed as a signal of intent. He has raised oil output to 1.7 million barrels per day, targeting 2 million by 2027 and 3 million by 2030, and has committed to publishing monthly performance reports and embedding international best practices.
“But Tinubu’s executive order has now removed the option of continued deferral. NNPC must raise capital on its own merits, through markets, not Abuja,” said Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies.
Mohammed concluded, “The company that once operated as a sovereign cash machine must now prove it can function as a commercial one. Whether it swims or sinks will depend not on the next executive order, but on decisions being made inside NNPC right now.”
