The Petroleum and Natural Gas Senior Staff Association of Nigeria on Thursday rejected President Bola Tinubu’s newly signed Executive Order mandating the direct remittance of oil and gas revenues to the Federation Account, describing the directive as a dangerous precedent that could undermine the Petroleum Industry Act and erode investor confidence in the sector.

PENGASSAN urged Tinubu to immediately withdraw the order to avoid sending the wrong signals to investors, stressing that an executive order cannot override an existing law.

Tinubu on Wednesday signed an executive order directing that royalty oil, tax oil, profit oil, profit gas, and other revenues due to the Federation under production-sharing, profit-sharing, and risk service contracts be paid directly into the Federation Account.

The order also scrapped the 30 per cent Frontier Exploration Fund established under the Petroleum Industry Act and halted the 30 per cent management fee on profit oil and profit gas previously retained by the Nigerian National Petroleum Company Limited.

Reacting at a press conference in Lagos on Thursday, the President of the PENGASSAN, 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.

Osifo argued that an executive order cannot override a law enacted by the National Assembly, insisting that the directive directly undermines provisions of the Petroleum Industry Act.

“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.

President Tinubu based the order on Sections 5 and 44(3) of the 1999 Constitution (as amended), stating that the measure was necessary to protect oil and gas revenues, curb wasteful deductions, and restore the constitutional entitlements of the federal, state, and local governments to the Federation Account.

The Presidency also argued that under the current Petroleum Industry Act framework, the Nigerian National Petroleum Company Limited retains 30 per cent of profit oil and profit gas as a management fee and an additional 30 per cent for frontier exploration—amounts the government described as excessive deductions that substantially reduce net inflows to the Federation Account.

But, Osifo disputed the claim that 30 per cent of revenue from production-sharing contracts is retained by the NNPC.

“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.

He warned that the order could send negative signals to the international investment community and undo the progress achieved since the passage of the Petroleum Industry Act in 2021, stating, “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 noted that, prior to the enactment of the Petroleum Industry Act, uncertainty in the oil and gas sector had led to a significant drop in rig counts and investment inflows.

“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 said.

The union also expressed concern that the directive could put around 4,000 jobs at the Nigerian National Petroleum Company Limited at risk.

“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.