Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has urged President Bola Tinubu to recall the newly signed Executive Order for direct remittance of oil and gas revenues to the federation account, warning that it may jeopardise the gains of the Petroleum Industry Act (PIA) enacted in 2021.
Energy expert and petroleum economist, Prof. Wumi Iledare, described the order as a significant fiscal intervention within Nigeria’s petroleum governance framework.
Alleging that many provisions in the Executive Order were incorrect, PENGASSAN claimed that Tinubu might have been misled, urging him to take a second look at it, considering his laudable impact to attract investments into the oil and gas industry.
The federation’s account, which serves the country’s three tiers of government, may receive an additional revenue of over N918.6 billion, which was deducted last year by the Nigerian National Petroleum Company Limited (NNPCL) following Tinubu’s order.
Addressing a press conference yesterday, PENGASSAN President, Festus Osifo, argued that the order was a direct attack on Sections 8, 9, and 64 of the PIA, insisting that it sends a troubling signal to investors.
“What are we telling the investors? What are we telling the international community? That just with an executive order, you can set aside the law of the land? This is an aberration. This should never have happened,” he said.
He faulted the 30 per cent revenue from the Production Sharing Contract (PSC) that goes to Nigerian National Petroleum Company Limited (NNPCL), alleging that it was not correct in any way, but below two per cent.
“The actual percentage that gets there eventually is somewhere below two per cent, and the 30 per cent Frontier Exploration Fund does not go directly to NNPCL but into a designated Frontier Exploration Account.
“Some provisions in the EO did not tell the entire truth,” he said.
He further clarified that royalties do not go into the regulator’s personal account but into the Federal Government account.
On why the association is bothered, Osifo expressed fears of potential job losses, stating that close to 4,000 of its members work with NNPCL, including its retired staff strength, and warned that if the order is allowed to stand, the company may struggle to meet its obligations, thereby bringing about a lot of challenges and industrial relations issues in the oil and gas sector.
“If this is allowed to sit through the way it is today, in the next few months, our members are in danger of being declared redundant because the company may not be able to meet their obligations,” he said.
The PENGASSAN boss recalled the association’s active role during the formulation of the PIA, including participation in public hearings and engagements with principal officers of the National Assembly to ensure the law would stabilise the industry and attract investment.
According to him, before the PIA was enacted, investment in the sector had declined for about a decade due to uncertainty. He said the passage of the law began to restore confidence and attract investments.
ILEDARE said the EO signals “a renewed effort to strengthen revenue transparency, reduce discretionary retention, and improve statutory remittances,” particularly at a time of budgetary pressure and debt sustainability concerns.
He acknowledged the administration’s stated objectives of safeguarding public revenues, curbing inefficiencies and enhancing fiscal discipline, noting that improving accountability in petroleum revenue flows remains a legitimate public finance priority.
However, the petroleum economist cautioned that certain aspects of the EO intersect directly with provisions of the PIA 2021.
According to him, statutory constructs such as the Frontier Exploration Fund, the Midstream and Downstream Gas Infrastructure Fund, and existing Production Sharing Contract (PSC) fiscal structures were established by the National Assembly and may require legislative amendment to effect substantive changes.
“While executive authority under Section 5 of the Constitution empowers the President to implement and enforce laws, substantive alterations to statutory fiscal frameworks may require legislative amendment to ensure constitutional alignment and institutional certainty,” he stated.
He warned that clarity in these distinctions is critical to avoid conflating contractual entitlements with discretionary fiscal practices.
On the direct remittance of royalty oil, tax oil, and profit oil to the Federation Account, Iledare noted that while the policy could enhance transparency and reduce intermediation, its implementation must be carefully sequenced to preserve contractual stability and prevent unintended legal or investor confidence challenges.
While the NNPCL, last year, deducted over N459.3 billion for management fees and another N459.3 billion as Frontier Exploration Fund (FEF), the total transfers to the federation account from Production Sharing Contract (PSC)’s N1.5 trillion earnings were N614 billion.
But some stakeholders slammed the order yesterday, stressing that the President’s action altered the PIA, a development that requires the National Assembly’s action.
A month-by-month breakdown shows that in December last year, NNPCL deducted N33.6 billion as FEF and N33.6 billion as management fee, making a gross deduction of N67.3 billion. In the month, transfer to the Federation Account was N47.9 billion.
In November, the state oil company deducted N59.2 billion, bringing the total to N118.4 billion. The transfer to the federation account stood at N78.9 billion. In October, it deducted N82.6 billion for FEF and management fees. While this totalled N165.2 billion, the transfer to the federation account stood at N110 billion.
The EO signed pursuant to Section 5 of the Constitution and anchored on Section 44(3), which vests ownership and control of mineral resources in the Government of the Federation, seeks to halt these automatic deductions and ensure that royalty oil, tax oil and profit oil flow directly into the Federation Account.
According to a statement by the President’s Special Adviser on Information and Strategy, Bayo Onanuga, the directive aims to restore the constitutional revenue entitlements of the three tiers of government, which the Federal Government believes have been significantly eroded under the current operational framework.
The government argues that the 30 per cent management fee is unjustified, given that NNPCL also retains 20 per cent of its profits for working capital and future investments, and that the combined deductions weaken federation revenues.
Chartered Accountant and Partner at Kreston Pedabo, Olufemi Idowu, described the development as a fundamental shift in public revenue management.
He urged prompt legislative consultation, transparent stakeholder engagement and clear implementation guidelines to safeguard contractual obligations.
Energy expert, Jide Pratt, said the Order effectively “nips in the bud” the issue of NNPCL holding and spending federation revenue, adding that direct remittance could boost available revenue for federal and state governments if properly accounted for.
