The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) on Thursday rejected President Bola Tinubu’s newly signed executive order mandating the direct remittance of oil and gas revenues to the Federation Account.
The union described the directive as a dangerous precedent that could undermine the Petroleum Industry Act (PIA) and erode investor confidence in the sector.
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The union called on the president to immediately withdraw the order, arguing that an executive order cannot override an existing law enacted by the National Assembly.
The Executive Order
On Wednesday, Mr Tinubu signed an executive order directing that royalty oil, tax oil, profit oil, profit gas, and other revenues due to the Federation under production-sharing, profit-sharing, and risk-service contracts be paid directly into the Federation Account.
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The order also scrapped the 30 per cent Frontier Exploration Fund established under the PIA and discontinued the 30 per cent management fee on profit oil and profit gas retained by the Nigerian National Petroleum Company Limited (NNPCL).
Anchoring the directive on Sections 5 and 44(3) of the 1999 Constitution (as amended), the presidency said the move was aimed at safeguarding oil and gas revenues, curbing what it described as excessive deductions and restoring the constitutional entitlements of federal, state and local governments to the Federation Account.
Presidential spokesperson Bayo Onanuga had earlier stated that under the current PIA framework, NNPCL retains 30 per cent of profit oil and profit gas as a management fee and another 30 per cent for frontier exploration, significantly reducing net inflows to the Federation Account.
While many experts have applauded the president’s order, the move has also been widely criticised by some analysts as a contravention of the provisions of the PIA Act endorsed by Mr Tinubu’s predecessor, the late President Muhammadu Buhari.
‘Executive Order Cannot Override Law’
But addressing journalists in Lagos on Thursday, PENGASSAN President, Festus Osifo, said the union was “troubled” by the development and called for its immediate withdrawal.
“Yesterday evening, we saw a release by one of the presidential spokesmen, Bayo Onanuga, releasing the content of the recently signed Executive Order. When we saw that order yesterday, we were troubled,” he said.
While acknowledging the president’s constitutional powers, Mr Osifo argued that an executive order cannot set aside statutory provisions.
“Executive orders cannot supersede the law of the land. Executive orders cannot override the provisions of a law. What the president has done is to use an executive order to set aside a law of the Federal Republic of Nigeria,” he said.
He cited Sections 8, 9 and 64 of the PIA, noting that the law took over a decade to pass.
“It took Nigeria over 10 years to enact the PIA. You cannot wake up one day and, by executive order, set aside key provisions of that law. This is an aberration. It should never have happened,” he added.
Disputing Revenue Claims
Mr Osifo also disputed the presidency’s claim that 30 per cent of revenue from production sharing contracts accrues to NNPCL.
“It was stated that 30 per cent of the revenue from production sharing contracts goes to NNPC. That is not correct in any way. The actual percentage that gets to NNPC eventually is somewhere below two per cent. The calculations are there,” he said.
He further clarified that funds earmarked for frontier exploration do not go directly to NNPCL.
“There is a Frontier Exploration Account where the money goes. It does not go to NNPC as a company,” he said.
Investor Confidence
The union warned that the directive could reverse gains recorded since the PIA was enacted in 2021 by sending negative signals to the international investment community.
“What are we telling investors? What signal are we sending out there that, just with an executive order, you can set aside a law of the land?” Mr Osifo asked.
“If this sails through, the international community will lose faith in the PIA. Investors will lose faith in the PIA. Tomorrow, they will think that any provision safeguarding their investment can be set aside by executive order. The signalling is troubling.”
He recalled that prolonged uncertainty before the PIA’s passage had led to declining rig counts and reduced capital inflows into the sector.
“For about 10 years before the PIA was enacted, investment in the industry went down. The rig count declined sharply due to uncertainty. When the PIA came, we started seeing some investments trickling in,” he said.
“We acknowledge that no law is 100 per cent perfect. The PIA had its limitations. But we believed it would provide stability and certainty. You cannot use one single executive order to set aside all the good work that has been done since August 2021.”
Job Loss Fears
PENGASSAN also expressed concern that the directive could jeopardise about 4,000 jobs within NNPCL.
“Today, we have close to 4,000 of our members working in NNPC. If this is allowed to stand the way it is, in the next few months, our members are in danger of being declared redundant because the company may not be able to meet its obligations,” Mr Osifo said.
“This will bring about a lot of industrial challenges in the industry. We are worried because this has direct implications for job security and the survival of the industry.”
Responding to suggestions that the union was prioritising members’ interests over national revenue concerns, Mr Osifo maintained that PENGASSAN’s position was driven by the need to protect Nigeria’s economic backbone.
“This industry has sustained our economy for over 50 years. Our interest is that the industry survives and continues to grow. When the industry grows, jobs are protected. When there are investments, Nigerians benefit,” he said.
He warned that declining investment could reduce oil production and foreign exchange earnings, ultimately weakening the naira and having ripple effects across the broader economy.
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Call for Legislative Process
Mr Osifo said the union had initially been informed that the government intended to sponsor an executive bill to amend aspects of the PIA, but was surprised that the changes were introduced through an executive order.
“We are calling on the president, with immediate effect, to recall this executive order and have a second look at it. We know the president has been travelling around the world to attract investment into the oil and gas sector. We cannot use one single executive order to jeopardise the gains we have made,” he said.
He also expressed concern over what he described as the silence of the National Assembly and the Office of the Attorney-General of the Federation on the matter.
The union said it would continue consultations with stakeholders, including its sister union, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), and other industry bodies, with further steps to be announced in due course.
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