The President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, has criticised the Federal Government’s explanation of its recent executive order on oil revenue remittance, describing references to a 30 percent deduction as misleading.
Speaking on Arise TV, Osifo argued that the figure cited in public discussions does not reflect the actual structure of revenues from production sharing contracts (PSCs).
“When you get revenue from PSC, you have to make some deductibles. You deduct royalties. You deduct tax. You also deduct the cost of cost recovery. Once you have done that, you will now have what we call profit oil or profit gas. Then that is where you now deduct the 30 per cent,” he said.
According to him, after accounting for royalties, taxes and cost recovery, the 30 percent referenced applies only to profit oil or profit gas — not total revenue.
“In effect, that deduction is about two per cent of the revenue of the PLCs,” he added, maintaining that public narratives have overstated the size of the adjustment.
Concerns Over Operational Impact
Osifo warned that the affected portion of revenue plays a role in funding internal obligations at the Nigerian National Petroleum Company Limited (NNPC Ltd), including salaries.
“That two per cent is what NNPC uses to pay salaries and meet some of its obligations. The one you are also removing from the midstream and downstream, it is part of what they use in meeting their internal obligations. So as you are removing this, how are they going to pay salaries?” he queried.
Beyond workforce concerns, he cautioned that abrupt policy changes could dampen investor confidence.
“If the international community and investors lose confidence in Nigeria, it has a way of affecting investment,” he said.
Call for Legislative Process
President Bola Tinubu signed the executive order on February 18, directing that royalty oil, tax oil, profit oil, profit gas and other upstream revenues be paid directly into the Federation Account Allocation Committee. The directive removes NNPC Ltd’s authority to retain a 30 percent management fee and frontier exploration fund previously permitted under the Petroleum Industry Act (PIA).
Osifo argued that an executive order should not override legislation passed by the National Assembly, describing the move as a troubling precedent.
“Yes, that is what should be done from the beginning. You can review the laws of a land. There is no law that is perfect,” he said.
He urged the President to constitute a review committee to assess the PIA and forward proposed amendments to lawmakers rather than altering its provisions through executive action.
“That should be the direction. You don’t put a cow before the horse,” he added.
Osifo further called for stakeholder engagement, including labour unions and industry operators, in any legislative review process.
“That is how laws are refined,” he said.
