PENGASSAN kicks against Tinubu’s oil revenue executive order
The Petroleum and Natural Gas Senior Staff Association of Nigeria on Thursday rejected President Bola Tinubu’s newly signed Executive Order mandating the direct remittance of oil and gas revenues to the Federation Account, describing the directive as a dangerous precedent capable of undermining the Petroleum Industry Act and eroding investor confidence in the sector.
PENGASSAN asked Tinubu to immediately recall the order to avoid sending wrong signals to investors, saying an executive order cannot set aside a law.
The President, on Wednesday, signed the 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. The order also scrapped the 30 per cent Frontier Exploration Fund under the PIA and stopped the 30 per cent management fee on profit oil and profit gas retained by the Nigerian National Petroleum Company Limited.
But reacting at a press conference in Lagos on Thursday, the President of PENGASSAN, Festus Osifo, said the union was “troubled” by the development and called for the immediate withdrawal of the order.
“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.
“Yes, we acknowledge that the President of the Federal Republic of Nigeria has a right to enact executive orders. We know that he has a duty and responsibility to protect and safeguard the industry.
But we strongly believe that in this particular case, the president has been misled. We strongly believe that the people advising the president did not tell him the entire truth,” Osifo said.
The union leader argued that an executive order could not override an existing law enacted by the National Assembly, insisting that the directive directly attacked provisions of the Petroleum Industry Act.
“Gentlemen of the press, you will agree with me that when we talk about executive orders, 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. That is exactly what has happened.
“The provisions of Sections 8, 9, and 64 of the PIA are clear. 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 stated.
Tinubu had anchored the order on Sections 5 and 44(3) of the 1999 Constitution (as amended), arguing that the move was necessary to safeguard oil and gas revenues, curb wasteful deductions, and restore constitutional entitlements of the federal, state, and local governments to the Federation Account.
The Presidency had also maintained 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, resulting in what it described as excessive deductions that significantly reduce net inflows to the Federation Account.
However, Osifo disputed the claim that 30 per cent of revenue under production sharing contracts goes to NNPC. “It was stated that 30 per cent of the revenue from production sharing contracts goes to NNPC. That is not correct. It is not correct in any way. The actual percentage that gets to NNPC eventually is somewhere below two per cent. The calculations are there.
“Also, it was stated that 30 per cent of the Frontier Exploration Fund goes to NNPC Limited. That is not correct. That money does not go to NNPC. There is a Frontier Exploration Account where the money goes. It does not go to NNPC as a company,” he said.
He warned that the order could send negative signals to the international investment community and reverse gains made since the passage of the PIA in 2021, saying, “What are we telling investors? What are we telling the international community? What signal are we sending out there that, just with an executive order, you can set aside a law of the land?
“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. It is totally not correct.”
Osifo recalled that uncertainty in the oil and gas industry prior to the enactment of the PIA had led to a drastic reduction in rig count and capital inflow. “As you can recall, for about 10 years before the PIA was enacted, investment in the industry went down. The rig count reduced drastically because of uncertainty. When the PIA came, we started seeing some investments trickling in.
“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,” he added.
The union also expressed fears that the directive could jeopardise about 4,000 jobs within NNPC.
“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. 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,” he warned.
Responding to questions on whether PENGASSAN was defending members’ interests over national revenue, Osifo said the union’s primary interest was the survival of the industry, which he described as 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.
“If there are no investments because of uncertainty, production will drop. Once production drops, foreign exchange earnings will reduce. Once foreign exchange earnings reduce, it will affect our exchange rate. And when the exchange rate is impacted, it affects every Nigerian.
“The phone in your hand is imported. Your camera is imported. The exchange rate determines the purchasing power of Nigerians. So, this is not just about oil workers; it is about the Nigerian economy,” he maintained.
The union said it was initially 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,” Osifo cautioned.
He regretted that the National Assembly and the Office of the Attorney-General had been silent since the order was made, leaving PENGASSAN as the only body fighting a cause the government institutions should be concerned about.
The union vowed to continue consultations with stakeholders, including its sister union, the Nigeria Union of Petroleum and Natural Gas Workers, and other industry bodies, to seek a review of the directive, saying the next line of action would be announced later.
