PENGASSAN Challenges Tinubu's Executive Order on Oil Revenues, Cites PIA Conflict
Nigeria's petroleum workers union PENGASSAN has demanded the withdrawal of President Tinubu's Executive Order on oil revenues, warning the directive undermines the Petroleum Industry Act and threatens investor confidence in the sector.
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The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has called for the immediate withdrawal of President Bola Tinubu's Executive Order governing oil revenue allocation, escalating tensions between organized labor and the federal government over petroleum sector governance.
The union characterized the presidential directive as "a dangerous precedent that could undermine the Petroleum Industry Act (PIA) and erode investor confidence in the sector," according to Premium Times. The challenge represents the most significant pushback against executive authority in Nigeria's oil sector since the PIA became operational in 2021, establishing a new regulatory framework intended to attract $30 billion in upstream investment over a decade.
Legal and Regulatory Tensions
PENGASSAN's objection centers on potential conflicts between executive orders and the legislative framework established under the PIA, which restructured Nigeria's petroleum industry after two decades of parliamentary debate. The Act created the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) as independent regulators, replacing the former Department of Petroleum Resources.
Executive orders bypassing parliamentary oversight have become increasingly common in Nigeria's petroleum sector, where the president traditionally serves as Minister of Petroleum Resources. However, the PIA was designed specifically to reduce discretionary executive control over oil revenues and licensing, establishing transparent processes for production sharing contracts and fiscal terms. Nigeria produced approximately 1.42 million barrels per day of crude oil in January 2024, according to OPEC secondary sources, with revenues constituting roughly 50 percent of federal government income.
The union's statement, as reported by Premium Times, suggests concern that unilateral revenue directives could override the PIA's host community development fund provisions, which allocate 3 percent of operating expenditure to affected communities, and the frontier exploration fund mechanisms. Any perceived weakening of these statutory provisions could trigger legal challenges from state governments and oil-producing communities.
Investor Confidence Implications
PENGASSAN's warning about eroding investor confidence addresses a critical vulnerability in Nigeria's petroleum sector. International oil companies including Shell, ExxonMobil, and TotalEnergies have divested approximately $15 billion in Nigerian onshore and shallow water assets since 2020, citing security concerns, regulatory uncertainty, and aging infrastructure requiring significant capital investment.
The PIA was intended to stabilize fiscal terms and provide regulatory certainty for long-term investment decisions in deepwater exploration and gas infrastructure. Nigeria holds Africa's largest natural gas reserves at 209 trillion cubic feet but has struggled to monetize these resources due to policy inconsistency and infrastructure deficits. The Nigerian National Petroleum Company Limited (NNPCL), restructured under the PIA as a commercial entity, has sought to attract $10 billion in gas infrastructure investment through public-private partnerships.
Executive orders modifying revenue allocation formulas without stakeholder consultation could complicate NNPCL's joint venture negotiations and production sharing contract terms. Major upstream projects including TotalEnergies' $16 billion Mozambique LNG development and Shell's Bonga Southwest deepwater field require fiscal stability assurances spanning 20-30 year project lifecycles.
Broader Governance Questions
The confrontation reflects deeper tensions over executive authority in resource governance across African petroleum producers. Angola revised its petroleum legislation in 2019 to reduce state oil company Sonangol's regulatory powers, while Ghana has faced parliamentary challenges over executive petroleum agreements lacking legislative approval.
Nigeria's federal structure adds complexity, with oil-producing states constitutionally entitled to 13 percent derivation revenue from resources extracted within their boundaries. Any executive order perceived as reducing state allocations would likely trigger Supreme Court challenges from Delta, Rivers, and Bayelsa state governments.
The outcome of PENGASSAN's challenge will test the durability of Nigeria's petroleum sector reforms and signal whether the PIA's legislative framework can withstand executive override. With Nigeria targeting 2 million barrels per day production by 2025 and seeking to position itself as a regional gas hub, regulatory stability remains essential for attracting the estimated $100 billion investment required to modernize petroleum infrastructure over the next decade.
The presidency has not yet issued a formal response to PENGASSAN's withdrawal demand, though resolution will likely require clarification of executive order scope relative to PIA statutory provisions.