PENGASSAN faults Tinubu’s executive order

…warns it could erode investor confidence in oil sector

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has warned that the newly issued executive order on oil and gas revenue remittance could erode investor confidence in the sector, citing concerns over policy stability, contractual clarity and the broader implications for the Petroleum Industry Act (PIA) framework.

The Executive Order signed by President Bola Tinubu on Wednesday mandates the direct remittance of oil and gas revenues to the Federation Account and seeks to eliminate deductions retained under the PIA structure, including management fees and other charges by the Nigerian National Petroleum Company (NNPC) Limited. The directive is anchored on constitutional provisions vesting control of mineral resources in the federal government and is intended to restore revenue entitlements to federal, state and local governments, which officials say were reduced by deduction mechanisms introduced under the PIA. 

President of PENGASSAN, Festus Osifo who spoke to journalists in Lagos on Thursday said the order sends a troubling signal to both local and international investors about the predictability of Nigeria’s legal and regulatory environment in the oil and gas sector. He argued that executive actions should not override existing legislation, particularly a law that took over a decade to enact.

“You will agree with me that executive order cannot supersede the law of a land. Executive order cannot override the provision of a law,” Osifo said.

“The information at our disposal was that there is going to be a bill, but instead of a bill, it now came as a way of executive order. So, we were not carried along in any way,” he said.

PENGASSAN stressed that the order could introduce regulatory uncertainty at a time when the industry is still adjusting to the post-PIA regime, warning that abrupt policy shifts affecting revenue structures and contractual expectations may be interpreted by investors as a sign of unstable governance in the upstream sector. The union emphasised that long-term capital in oil and gas is highly sensitive to policy consistency, particularly where production sharing contracts, profit oil arrangements and fiscal terms are involved. 

According to Osifo, the union believes the president may have been misinformed about the implications of the order, noting that the PIA was designed to provide long-term clarity, stabilise the industry, and attract investment in a globally competitive energy market. He stated that weakening the perceived sanctity of the law could discourage capital inflows at a time when investors are increasingly sensitive to regulatory risks.

“We strongly believe that in this particular case, that the president has been misled. We strongly believe that the people that are advising the president, they did not actually tell him the entire truth,” he said.

Osifo recalled that PENGASSAN actively participated in the formulation of the PIA, including public hearings and engagements with principal officers of the National Assembly, to ensure the legislation would incentivise investment and provide a clear rule of engagement for operators. He noted that uncertainty prior to the enactment of the PIA contributed to a decline in investment and reduced industry activity.

“As you can recall, 10 years before PIA was enacted, the investment in the industry went down, because of the uncertainty that was imposed in the industry,” he said, adding that some investments only began to return after the law came into force in 2021.

The union further cautioned that altering key fiscal or governance provisions through executive means could lead investors to question the durability of existing contractual and regulatory terms, including royalties and other obligations. Osifo said this could create the perception that policies may be changed unilaterally, thereby affecting long-term investment planning.

“What are we telling the investors? What are we telling the international community? What is the signalling that we are sending out there that just with an executive order, you can set aside the law of the land?” he said.

Beyond investor sentiment, the union raised concerns over possible employment implications, particularly for workers in government-linked oil entities. Osifo said thousands of employees could face redundancy risks if the policy direction affects the financial obligations and operational stability of affected companies.

“We are bothered because today we have about 4,000 Nigerians working there. If this is allowed to sit through the way it is today, I can tell you that in the next few months our members are in danger of being declared as redundant,” he said.

Osifo linked oil sector stability to foreign exchange earnings and macroeconomic performance, stressing that reduced investment could weaken production levels and, by extension, national revenue and currency stability. “What is our major revenue earner as a country? It is actually oil and gas. If there are no investments in that sector, if the number of rigs goes down because of uncertainties in the industry, it is going to affect production,” he said.

He added that PENGASSAN would prioritise engagement with stakeholders, including government institutions, sister unions, and industry operators, as part of its initial response, while its National Executive Council is expected to deliberate further on the matter.