The Petroleum and Natural Gas Senior Staff Association of Nigeria has 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.
The union called on the President to immediately recall the order, arguing that an executive directive cannot override an existing law enacted by the National Assembly.
Tinubu had signed the 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 directive 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.
At a press conference in Lagos on Thursday, PENGASSAN President Festus Osifo said the union was “troubled” by the development.
“Yes, we acknowledge that the President of the Federal Republic of Nigeria has a right to enact executive orders. But we strongly believe that in this particular case, the president has been misled,” Osifo said.
He maintained that executive orders cannot supersede the law of the land, insisting that the directive directly attacks provisions of the PIA.
“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.
The President 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 excessive deductions and restore constitutional entitlements of federal, state and local governments to the Federation Account.
The Presidency 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 deductions that significantly reduce net inflows to the Federation Account.
However, Osifo disputed this claim, arguing that the actual percentage accruing to NNPCL from production sharing contracts is below two per cent. He also clarified that funds allocated for frontier exploration are paid into a dedicated account and not directly to the company.
The union warned that the directive could send negative signals to the international investment community and reverse gains recorded since the PIA was enacted in 2021.
“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, investors will lose faith in the PIA,” Osifo said.
He recalled that prolonged uncertainty before the passage of the PIA led to a sharp decline in rig count and capital inflows into the sector, adding that recent stability had begun attracting new investments.
PENGASSAN also expressed concern that the order could jeopardise about 4,000 jobs within NNPCL, warning of possible redundancies if the company is unable 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 said.
Osifo stressed that the union’s stance was not solely about protecting its members but about safeguarding Nigeria’s broader economic stability.
“This industry has sustained our economy for over 50 years. If production drops because of uncertainty, foreign exchange earnings will reduce, and that will affect every Nigerian,” he added.
The union noted that it had earlier 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 instead.
PENGASSAN vowed to continue consultations with stakeholders, including the Nigeria Union of Petroleum and Natural Gas Workers, and other industry bodies. It said its next line of action would be announced after further engagements.
