Oil Revenue: PENGASSAN accuses Tinubu of destroying Petroleum Industry

The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has accused President Bola Tinubu of destroying Petroleum Industry and setting a dangerous precedent that coulf undermine the Petroleum Industry Act (PIA).

The remark followed directive that all oil revenue should be paid directly into the Federation Account which an executive order has been signed in that regard.

Advertisements

The Union said, it rejects the executive order and called for its withdrawal, adding that an executive order cannot override the Petroleum Industry Act, PIA, which is a law of the Nigerian parliament.

President Tinubu on Wednesday signed an executive order that directs payment of oil royalty, tax oil, profit oil, profit gas, and other revenues into the Federation Account.

Advertisements

The executive order mandated revenue production under production-sharing, profit-sharing, and risk-service contracts to be remitted into the Federation Account.

Meanwhile, the 30 per cent Frontier Exploration Fund established under the PIA be discontinued. But the 30 per cent management fee on profit oil and profit gas be retained by the Nigerian National Petroleum Company Limited (NNPCL).

The presidency cited Sections 5 and 44(3) of the 1999 Constitution (as amended), as a move to safeguard oil and gas revenues from excess deductions.

The presidency added that the development would restore
the constitutional entitlements of federal, state and local governments to the Federation Account.

Reactingvto executive order on Thursday in Lagos, President of PENGASSAN, Festus Osifo said, ‘Executive Order Cannot Override Law’, expressing concern over the new development.

“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,” he said.

While acknowledging the president’s constitutional powers, Mr Osifo argued that an executive order cannot set aside statutory provisions.

“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,” he said.

He cited Sections 8, 9 and 64 of the PIA, noting that the law took over a decade to pass.

“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 added.

Mr Osifo also disputed the presidency’s claim that 30 per cent of revenue from production sharing contracts accrues to NNPCL.

“It was stated that 30 per cent of the revenue from production sharing contracts goes to NNPC. That is not correct in any way. The actual percentage that gets to NNPC eventually is somewhere below two per cent. The calculations are there,” he said.

He further clarified that funds earmarked for frontier exploration do not go directly to NNPCL.

“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 directive could reverse gains recorded since the PIA was enacted in 2021 by sending negative signals to the international investment community.

“What are we telling investors? What signal are we sending out there that, just with an executive order, you can set aside a law of the land?” Mr Osifo asked.

“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.”

He recalled that prolonged uncertainty before the PIA’s passage had led to declining rig counts and reduced capital inflows into the sector.

“For about 10 years before the PIA was enacted, investment in the industry went down. The rig count declined sharply due to uncertainty. When the PIA came, we started seeing some investments trickling in,” he said.

“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.”

PENGASSAN also expressed concern that the directive could jeopardise 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,” Mr Osifo said.

“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.”

Responding to suggestions that the union was prioritising members’ interests over national revenue concerns, Mr Osifo maintained that PENGASSAN’s position was driven by the need to protect 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,” he said.

He warned that declining investment could reduce oil production and foreign exchange earnings, ultimately weakening the naira and having ripple effects across the broader economy.

Mr Osifo said the union had initially 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.

“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,” he said.

He also expressed concern over what he described as the silence of the National Assembly and the Office of the Attorney-General of the Federation on the matter.

The union said it would continue consultations with stakeholders, including its sister union, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), and other industry bodies, with further steps to be announced in due course.

Advertisements

Advertisements