By Emeka Ugwuanyi
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has condemned and rejected the Executive Order on direct remittance of oil and gas revenues to the federation account by President Bola Ahmed Tinubu on Wednesday citing several harms the Order would do to the oil and gas industry and the economy.
PENGASSAN President, Comrade Festus Usifo, who addressed reporters on the issue on Thursday, noted that the Association strongly believe that the people advising the President didn’t tell him the entire truth because the President has been travelling to different parts of the world to attract investment into the industry to ensure that the Nigerian economy thrives. He has worked in the oil and gas industry and knows that the industry has been the backbone of Nigeria’s economy in the past 50 years. To them, if the President knew the implications of this Executive Order, he couldn’t have appended his signature to it.
Besides, the Executive Order is in direct attack to the provisions of the Petroleum Industry Act (PIA), which took over 10 years as a bill before being passed into law, therefore, it shouldn’t supersede or override the laws of the land, PENGASSAN pointed out.
Osifo stated that the President through the Executive Order was trying to safeguard the federation oil and gas revenue but in contrary has created a window that would reverse all Mr. President has done in the past few years trying to boost the industry through attraction of foreign and local investments into the oil and gas industry. He explained that the PIA was crafted to attract investment into the industry and ensure investor-confidence but with this Executive Order, investors will take their petrodollar outside the country as it erodes investor-confidence in the nation’s policies and laws. He reminded the President that unlike what obtained in the past 15 years and beyond, many African countries have discovered and are producing oil and gas. Therefore, the competition is currently higher and investors have available options where to take their petrodollars to.
To protect the naira, jobs and the economy, the President needs to withdraw the Executive Order, properly review it for the growth of the Nigerian oil and gas industry and the economy.
Osifo said: “We understand that the President has the constitutional right to issue Executive Orders and that government has a duty to safeguard the industry.
“However, in this case we believe he was misled. We strongly believe his advisers did not fully inform him of the consequences.
“This is a President who has travelled across the world to attract investment and who previously worked in the oil and gas industry with ExxonMobil. If he had been exposed to the entire truth regarding this EO, he would have acted otherwise.
“The Executive Order cannot supersede the law of the land, it cannot override statutory provisions or invalidate existing laws enacted by the National Assembly. Sections 8, 9 and 64 of the PIA are clear on this.”
“What has been done amounts to setting aside an Act of the Federal Republic of Nigeria. That is an aberration and should never happen.
“If this is allowed to stand, the international community will lose confidence in the PIA and may conclude that at any time the Executive can nullify provisions safeguarding their investments. The signaling is faulty and completely incorrect.
“Some provisions in the Executive Order also do not reflect the full facts, adding that it was stated that 30 percent from Production Sharing Contracts goes to NNPC Limited, but that is not correct.
“The actual percentage that eventually gets to NNPC is below two percent; the calculations are there. Likewise, the claim that 30 percent of the Frontier Exploration Fund goes directly to NNPC is inaccurate.
“Those funds go into designated accounts, not into NNPC directly. It is also wrong to assume royalties go into the personal account of Nigerian Upstream Petroleum Regulatory Commission (NUPRC) those revenues go into the Federal Government account.”
The PENGASSAN President further noted that beyond wrong signaling, the association is deeply concerned because its members working with NNPC, about 4,000 Nigerians, could be on the verge of redundancy in the coming months if this stands, as management may be unable to meet obligations to them.
“That would create serious industrial relations challenges in the sector. This is why we believe some of the information presented to the President was inaccurate, and we urge him to recall the Order and review it.
“We know he has worked hard to attract investment into the industry, and we should not allow one Executive Order to undermine the progress made since the PIA was enacted in August 2021,” Osifo said.
“Besides, there are already challenges facing SMEs since the Naira is grossly undervalued. If we want inflation to reduce, we must lower foreign exchange costs and allow the naira to appreciate. Oil and gas foreign exchange earnings remain a major revenue source.
“If the industry declines, the limited revenue generated will be used merely to defend the naira, which will erode workers’ purchasing power.
“Even the ₦70,000 minimum wage will lose value if production drops, rig counts fall, and foreign exchange earnings shrink,” he said.
According to him, the Executive Order is not just an attack on workers in the oil and gas industry, it is a direct threat to Nigeria’s economy. “We are professionals in this industry and understand the full implications of these reforms. Government may seek more revenue, but the approach could end up yielding less because it risks discouraging investment.
“International investors need certainty, clarity of laws, and predictable operating frameworks. They will not invest in an environment where rules are unclear or subject to sudden change,” he noted.
Osifo stated that the Association learnt that a bill would be presented to the National Assembly and their members were preparing for it but they didn’t know it would come as an Executive Order.
On the next line of action, Osifo stated the press briefing was the Association first line of engagement on the Order but assured that would engage their sister unions, National Assembly and other critical stakeholders on the matter. “This is just the first phase of our response. We do not act on impulse; we will engage with the government and relevant stakeholders over the coming weeks, after which our National Executive Council will convene to determine the next course of action.”
“Since our founding in 1970, PENGASSAN has defended this industry, which has been the backbone of Nigeria’s economy and has largely supported infrastructure, healthcare, and national development.” he noted.
Below is the press release on direct remittance of oil and gas revenues to federation account.
PRESIDENT TINUBU SIGNS EXECUTIVE ORDER FOR DIRECT REMITTANCE OF OIL AND GAS REVENUES TO FEDERATION ACCOUNT
President Bola Tinubu has issued an executive order to safeguard and enhance oil and gas revenues for the Federation, curb wasteful spending, eliminate duplicative structures in this critical sector of the national economy, and redirect resources for the benefit of the Nigerian people.
The President signed the EO in pursuance of Section 5 of the Constitution of the Federal Republic of Nigeria (as amended).
The Executive Order is anchored on Section 44(3) of the Constitution, which vests ownership, control, and derivative rights in all minerals, mineral oils, and natural gas in, under, and upon any land in Nigeria, including its territorial waters and Exclusive Economic Zone, in the Government of the Federation.
The directive seeks to restore the constitutional revenue entitlements of the Federal, State, and Local Governments, which were taken away in 2021 by the Petroleum Industry Act (PIA). The PIA created structural and legal channels through which substantial Federation revenues are lost through deductions, sundry charges, and fees.
Bayo Onanuga
Under the current PIA framework, NNPC Limited retains 30 per cent of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts.
In addition, the company retains 20 per cent of its profits to cover working capital and future investments.
Given the existing 20% retention, the additional 30% management fee is considered unjustified by the Federal Government, as the retained earnings are already sufficient to support the functions NNPCL performs under these contracts.
NNPC Limited also retains another 30% of its profit oil and profit gas under the production sharing, profit sharing, and risk service contracts, as the Frontier Exploration Fund under sections 9(4) and (5) of the PIA. A fund of this size, being devoted to speculative exploration, risks accumulating large idle cash balances, which would encourage inefficient exploration spending, at a time when government resources are urgently needed for core national priorities, including security, education, healthcare, and energy transition investments.
There is also the Midstream and Downstream Gas Infrastructure Fund (MDGIF) under Section 52(7)(d) PIA, funded by the collection of gas flaring penalties provided under Section 104. The fund is to be used for supporting environmental remediation and relief for host communities impacted by gas flaring. However, section 103 of the PIA has already established a dedicated Environmental Remediation Fund, administered by NUPRC, specifically designed to fund the rehabilitation of communities negatively impacted by upstream petroleum operations, including gas flaring. Furthermore, Section 103 already imposes a fee on lessees to contribute to this fund for precisely this purpose.
All these deductions far exceed global norms and effectively divert more than two-thirds of potential remittances to the Federation Account. The continuing decline in net oil revenue inflows is largely attributable to these deductions and fragmented oversight under the current PIA architecture.
The Executive Order aims to resolve, among others, the duplicative 30 per cent deduction for Profit Sharing arrangements by addressing overlapping and redundant provisions across all relevant laws and regulatory instruments under the PIA framework and NNPC Limited’s governing structure. The objective is to eliminate unjustified multiple layers of deductions that erode revenues that ought to accrue to the Federation Account, enabling the three tiers of government to pursue critical national priorities.
The President has identified structural concerns regarding the continued role of NNPC Limited as a concessionaire under Production Sharing Contract arrangements. The existing framework, which allows the company to influence operating costs while simultaneously functioning as a commercial entity, creates potential competitive distortions and undermines its transition into a fully commercial operator as envisioned under the PIA.
The Executive Order, therefore, introduces immediate measures to curb leakages, enhance transparency, eliminate duplicative structures, and reposition NNPC Limited strictly as a commercial enterprise, while safeguarding the Federation’s interests.
In rolling out the order, the President affirmed that the reforms are of urgent national importance, given their implications for national budgeting, debt sustainability, economic stability, and the overall well-being of Nigerians.
President Tinubu noted that his administration will also undertake a comprehensive review of the Petroleum Industry Act in consultation with relevant stakeholders to address identified fiscal and structural anomalies.
According to the Presidential Executive Order, which has been officially gazetted, NNPC Limited will no longer collect and manage the 30% Frontier Exploration Fund. NNPC Limited will ensure that the 30% profit from oil and gas from production sharing, profit sharing, and risk service contracts currently earmarked for the frontier exploration fund is henceforth transferred to the Federation Account.
NNPC Limited will no longer be entitled to the 30% management fee on profit oil and profit gas revenues, which should go to the federation account.
In the same vein, all operators/contractors of oil and gas assets held under a production sharing contract shall, from the date of the Executive Order, which is February 13, 2026, pay Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and any other interest howsoever described which is due to the government of the federation directly to the Federation Account.
President Tinubu has also suspended payments of the Gas Flare Penalty into the Midstream and Downstream Gas Infrastructure Fund. The Commission shall, from the date of the Executive Order, pay proceeds from all penalties imposed on operators for flaring gas into the Federation Account and cease payment of such proceeds into the Midstream and Downstream Gas Infrastructure Fund (MDGIF). All expenditure from the MDGIF shall be conducted in line with extant public procurement laws, policies and regulations.
President Tinubu has approved the constitution of a joint project team to execute integrated petroleum operations. The Commission shall serve as the interface with licensees and lessees in respect of integrated operations where upstream and midstream petroleum operations are fully combined.
President Tinubu approved the establishment of an implementation committee to oversee and ensure the effective, coordinated implementation of the executive order. The members of the committee include the Minister of Finance and Coordinating Minister of the Economy, the Attorney-General of the Federation and Minister of Justice, the Minister of Budget and National Planning and the Minister of State, Petroleum Resources (Oil). Other members of the Committee are the Chairman, Nigeria Revenue Service; a Representative of the Ministry of Justice; the Special Adviser to the President on Energy; and the Director-General, Budget Office of the Federation. The latter will provide a secretariat to the committee.
Bayo Onanuga, Special Adviser to the President (Information and Strategy)
