The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has rejected President Bola Tinubu’s newly signed Executive Order directing the direct remittance of oil and gas revenues to the Federation Account, describing it as a dangerous move capable of undermining the Petroleum Industry Act (PIA) and eroding investor confidence.
Gatekeepers News reports that the President on Wednesday signed the order mandating that royalty oil, tax oil, profit oil, profit gas, and other revenues due 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 halted the 30 per cent management fee on profit oil and profit gas retained by the Nigerian National Petroleum Company Limited (NNPCL).
However, addressing a press conference in Lagos on Thursday, PENGASSAN President 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.
He argued that an executive order cannot override an existing law passed by the National Assembly, insisting that the directive directly contradicts provisions of the PIA.
“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.
While the Presidency anchored the directive on Sections 5 and 44(3) of the 1999 Constitution (as amended), arguing that it was necessary to curb excessive deductions and restore constitutional entitlements to federal, state, and local governments, Osifo disputed claims that 30 per cent of production sharing contract revenue goes to NNPCL.
“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.
The union warned that the order could reverse gains recorded since the PIA was enacted in 2021, sending negative signals to the international investment community.
“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 said.
He recalled that uncertainty in the oil and gas sector before the PIA led to a drastic drop 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.
PENGASSAN also expressed concern that the directive could threaten 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. 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 suggestions that the union was prioritising members’ interests over national revenue, Osifo maintained that its focus 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 had initially been informed that the government planned to sponsor an executive bill to amend aspects of the PIA but was surprised that the changes came via 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.
PENGASSAN added that it would continue consultations with stakeholders, including its sister union, the Nigeria Union of Petroleum and Natural Gas Workers, and other industry bodies, with its next line of action to be announced later.
