PENGASSAN Rejects Presidential EO on Oil and Gas Revenue Remittance

By Naija Enquirer Staff

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has officially rejected President Bola Ahmed Tinubu’s Executive Order (EO) on oil and gas revenue remittance, citing breaches of the Petroleum Industry Act (PIA) and highlighting potential instability in the oil sector.

Addressing the media in Lagos, PENGASSAN president, Festus Osifo, argued that the EO was hastily signed and contains provisions and calculations that violate the PIA, which could frustrate investment and discourage potential investors.

Concerns over Frontier Exploration Fund and Revenue Management

Osifo pointed out that, contrary to claims in the EO, NNPC Limited does not fully control the 30 per cent Frontier Exploration Fund, which is largely domiciled outside the company. He warned that the EO sets a dangerous precedent and creates uncertainties for investors regarding possible future increases in royalties and taxes that may reduce Return on Investment (RoI).

The Union called for an immediate reversal of the Order and demanded broader stakeholder engagement in reviewing the policy, noting that key industry partners were not consulted during the EO’s release.

Stakeholder Coordination and Next Steps

PENGASSAN plans to convene a National Executive Council (NEC) meeting next week and meet with the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), Trade Union Congress (TUC), and other stakeholders to determine a coordinated course of action.

Government Justification for the Executive Order

President Tinubu issued the EO to safeguard and enhance oil and gas revenues for the Federation, curb wasteful spending, eliminate duplicative structures, and redirect resources to benefit Nigerians. The EO is anchored on Sections 5 and 44(3) of the Constitution, which vest ownership and derivative rights over all minerals, mineral oils, and natural gas in the Federal Government.

The directive restores constitutional revenue entitlements for the federal, state, and local governments, addressing deductions and fees under the current PIA framework that have reduced net revenue inflows.

Key Measures Introduced

• NNPC Limited will no longer retain the 30 per cent management fee on profit oil and profit gas under Production Sharing, Profit Sharing, and Risk Service Contracts.
• All operators/contractors under production sharing contracts must remit Royalty Oil, Tax Oil, Profit Oil, Profit Gas, and other dues directly to the Federation Account.
• Payments of the Gas Flare Penalty into the Midstream and Downstream Gas Infrastructure Fund (MDGIF) are suspended, with proceeds now directed to the Federation Account.
• The EO establishes a joint project team for integrated petroleum operations and an Implementation Committee to coordinate execution, including high-level federal officials from Finance, Justice, Petroleum Resources, and the Budget Office.

Implications for the Oil and Gas Sector

The EO aims to eliminate duplicative deductions, enhance transparency, and reposition NNPC Limited strictly as a commercial enterprise while safeguarding the Federation’s interests. President Tinubu emphasized that the reforms are critical for national budgeting, debt sustainability, economic stability, and the well-being of Nigerians.

PENGASSAN, however, remains opposed, citing investor uncertainty and breaches of the PIA, and is set to engage other stakeholders to seek revisions to the Executive Order.