PENGASSAN: Tinubu’s executive order could weaken NNPCL, discourage investors

By Yunus Yusuf/Florence Onuegbu

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) on Thursday faulted President Bola Tinubu’s Executive Order for direct remittance of oil and gas revenue to the Federation Account by the National Petroleum Corporation, NNPC.

PENGASSAN President, Mr Festus Osifo, spoke in Lagos while responding to questions on the new executive order and its implications for the industry.

Tinubu had on Feb. 18, issued the Executive Order to safeguard and enhance revenues, curb wasteful spending and eliminate duplicative structure in the sector.

The President according to a statement issued by his spokesperson, Mr Bayo Onanuga, said the directive sought to restore constitutional revenue entitlements of the three tiers of government removed in 2021 by the Petroleum Industry Act.

He said the PIA created structural and legal channels through which substantial Federation revenues were lost through deductions, charges and fees.

Under the current PIA framework, NNPC Ltd. retains 30 per cent of the Federation’s oil revenues as a management fee on profit oil and profit gas.

The President said the company also retained 20 per cent of its profits to cover working capital and future investments.

Tinubu noted that the order introduced immediate measures to curb leakages, enhance transparency and reposition NNPC Ltd. strictly as a commercial enterprise.

He said the reforms were urgent given their implications for national budgeting, debt sustainability and economic stability.

Tinubu said his administration would also undertake a comprehensive review of the PIA in consultation with stakeholders.

However, PENGASSAN at the event in Lagos noted that the executive order was introduced without broad consultation with key industry stakeholders, heightening concerns about transparency and regulatory certainty.

Osifo claimed that the order could weaken the Nigerian National Petroleum Company Limited (NNPCL), discourage investors and ultimately affect ordinary Nigerians.

“We were not adequately consulted. When policies of this magnitude are introduced without engagement, it creates uncertainty, and uncertainty is the enemy of investment,” he said.

The President of PENGASSAN expressed concern about what he described as increasing political interference in NNPCL’s operations, warning that excessive control could undermine professional management.

He said the company had seasoned professionals who understood the industry’s technical and commercial dynamics.

“But when political considerations override professional judgement, efficiency suffers,” Osifo said.

He argued that insulating NNPCL from undue interference would strengthen its balance sheet, improve transparency and enhance its appeal to global investors.

“If we remove unnecessary political influence, NNPCL can compete effectively with its global peers. That alone would send a powerful signal,” he said.

Osifo linked the sector’s health to the stability of the naira, noting that exchange rate volatility raised import costs and eroded purchasing power.

“When the naira weakens, import costs rise immediately. Equipment, services and refined products become more expensive.

“But when oil and gas earnings grow and are properly managed, they strengthen the currency,” he said.

According to him, a stable oil sector would support the naira, improve wages and enhance living standards.

“The industry is not isolated from the economy. Its performance determines the strength of our currency and the welfare of our people,” he said.

The PENGASSAN President that oil and gas investment across Africa remained competitive, with capital flowing to jurisdictions offering regulatory clarity and stable policies.

“Oil and gas investment is long-term and capital-intensive. Investors will not commit billions of dollars where policies shift unpredictably,” he said.

He cited Nigeria’s marginal field programme, noting that many awarded licences had struggled to reach production, placing financial institutions under pressure.

“When marginal licences fail to convert to production, banks are exposed. That weakens confidence across the financial system,” he said.

Osifo stressed that any executive action must align with the Petroleum Industry Act to avoid negative investor signals.

He warned that regulatory unpredictability could push investors towards more stable jurisdictions.

“We cannot afford capital flight at this time. Nigeria is competing for global energy investment,” he said.

Osifo said PENGASSAN would convene its National Executive Council to review the order and develop an engagement strategy.

“We will engage the government, the Attorney-General, regulators and stakeholders. Our goal is constructive dialogue, not confrontation,” he said.

He reiterated that safeguarding the industry was vital to national development.

“This industry funds infrastructure, education and healthcare. If we weaken oil and gas, we weaken the foundation of other sectors,” he said.

As Nigeria faces economic headwinds, Osifo said preserving regulatory stability in the strategic sector was imperative.

“In oil and gas, stability is prosperity. We must get it right,” he said.

Meanwhile, the Capital Market Academics of Nigeria (CMAN) has described the Executive Order for direct remittance of oil and gas revenue to the Federation Account as one of the most courageous reforms of Tinubu’s administration.

CMAN’s President, Prof. Uche Uwaleke, said this in a statement on Thursday in Abuja.

He said the move was a step towards strengthening fiscal transparency and achieving equity in revenue distribution, ensuring that all tiers of government benefitted equitably from the country’s oil and gas wealth.

He described the development as a victory for the Federation Accounts Allocation Committee and for fiscal justice in the country.

According to him, it will significantly boost revenues available to all tiers of government, thereby enhancing their capacity to deliver services to the people, generate economic activities and boost the capital markets.

” Since 2021 when the Petroleum Industry Act (PIA) was implemented, the Federation Account shared by the federal, state, and local governments, received only 40 per cent of these proceeds.

” While the Nigerian National Petroleum Company Ltd. (NNPCL) retained 60 per cent through the Frontier Exploration Fund (30 per cent) under their expenditure oversight and a management fee of 30 per cent.

” This imbalance undermined the principle of collective ownership of national resources.

” By correcting this anomaly, the President has ensured that all tiers of government benefit equitably from the nation’s oil and gas wealth,” he said.

Uwaleke suggested that the reform process must continue, particularly with regards to the Joint Venture assets, noting that it should also be returned to the Federation Account.

He called on all stakeholders to support the President’s reform agenda.

Uwaleke said the association remained committed to advocating for policies that strengthened transparency, accountability, and fairness in the management of the country’s resources resources.

He emphasised the importance of including the Chairman of the Revenue Mobilisation, Allocation and Fiscal Commission on the Committee overseeing the implementation of the Order to ensure transparency and accountability.

(NAN)