Revenue Reform Sparks Backlash as Oil Workers’ Union Warns of Sector Fallout

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has sounded a strong warning over a new Executive Order signed by Bola Ahmed Tinubu directing that all oil and gas royalties, taxes, and profit oil and gas revenues be paid directly into the Federation Account.
The union described the move as a potentially destabilising intervention that could undermine investor confidence, disrupt operations within the Nigerian National Petroleum Company Limited (NNPC), and threaten thousands of jobs across the industry.
Addressing journalists in Lagos on Thursday, PENGASSAN President, Festus Osifo, said the association was “deeply troubled” by the directive, warning that while the President possesses constitutional authority to issue executive orders, such powers must not contradict existing laws — particularly the Petroleum Industry Act (PIA).
“Executive Orders Cannot Override the Law”
Osifo argued that the new order conflicts directly with critical provisions of the PIA, notably Sections 8, 9, and 64, which clearly outline the structure of revenue remittances and operational funding mechanisms within the oil and gas industry.
According to him, an executive order cannot supersede an Act passed by the National Assembly.
“Executive orders cannot override the law of the land. It is like waking up one day to amend statutory pension contributions or suspend parts of the Constitution by executive fiat. It cannot stand,” Osifo stated.
He expressed concern that such a move sends a negative message to both domestic and international investors about regulatory stability in Nigeria.
“What signal are we sending to the global investment community? That a law painstakingly debated for years can be altered overnight? This is an aberration that should never have happened,” he added.
Background: Years of Negotiation Under the PIA
Osifo recalled that PENGASSAN, alongside its sister union Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), the Nigeria Employers’ Consultative Association (NECA), the Oil Producers Trade Section (OPTS), and the national oil company, were actively involved in shaping the PIA.
The law, he noted, was the product of years of stakeholder consultations aimed at stabilising the sector, clarifying fiscal frameworks, and restoring investor confidence after nearly a decade of declining capital inflows.
Before the PIA’s passage, Nigeria’s oil and gas sector suffered a prolonged investment slump. Rig counts fell sharply as international oil companies redirected capital to more stable jurisdictions due to regulatory uncertainty.
“When the PIA came into effect, investments began to trickle back. There was renewed clarity. But recent developments — especially this executive order — are reversing that progress,” Osifo warned.
Key Provisions of the Executive Order
The new directive provides that:
All royalties, taxes, profit oil and gas proceeds must be paid directly into the Federation Account.
NNPC will no longer collect the 30% Frontier Exploration Fund.
The 30% management fee on profit oil and gas is discontinued.
Gas flare penalties previously allocated to the Midstream and Downstream Gas Infrastructure Fund (MDGIF) are now suspended and redirected to the Federation Account.
The Presidency stated that the objective of the order is to curb revenue leakages, enhance transparency, and reposition NNPC as a commercially driven enterprise while restoring constitutional revenue entitlements to federal, state, and local governments.

Job Security at Risk

Beyond the legal and fiscal implications, PENGASSAN expressed serious concern over employment stability within the industry.
“Our primary interest is the survival of this sector,” Osifo said. “This industry has sustained Nigeria’s economy for over five decades. If the sector is destabilised, our members’ jobs are at risk.”
He warned that declining investment typically leads to reduced operational activity, which in turn results in workforce downsizing.
“When investment shrinks, operations contract. And when operations contract, workers are the first casualties,” he stressed.
PENGASSAN fears that abrupt policy shifts could stall ongoing projects, weaken operational cash flows, and create uncertainty for companies operating under the fiscal structure defined by the PIA.
Investor Confidence and Regulatory Certainty
The union maintained that regulatory consistency is critical in a capital-intensive sector like oil and gas, where investment decisions are long-term and highly sensitive to policy changes.
Nigeria competes globally for upstream and midstream capital, and investors prioritise jurisdictions where laws and fiscal terms remain predictable.
Osifo suggested that the President may not have been fully briefed on the potential implications of the directive.
“We strongly believe Mr. President may have been misled. He has been actively courting foreign investment across the globe. If he had been exposed to the full ramifications of this order, he might have acted differently,” he said.

Call for Urgent Review

PENGASSAN has called for immediate stakeholder consultations and a review of the Executive Order to prevent further uncertainty in the sector.
“There is no law that is 100 percent perfect,” Osifo acknowledged. “The PIA has its limitations. But it provides clarity. Investors need that clarity. Workers depend on that clarity.”
The union emphasised that protecting the oil and gas industry is directly tied to safeguarding employment, sustaining government revenues, and ensuring Nigeria’s long-term economic stability.
“We must do everything possible to protect this industry. When the industry grows, our members’ jobs are secure. That is our ultimate concern,” Osifo concluded.
As debates intensify, the coming days are likely to test the balance between executive authority, legislative supremacy, and the urgent need for fiscal transparency in Nigeria’s most strategic sector.