Blue Economy
PENGASSAN vs. Tinubu’s Oil Revenue Order: Reform Resistance or Legitimate Concern?
The oil workers’ union wants the president to reverse a landmark order that strips NNPC of its power to collect and deduct Nigeria’s oil money. But the numbers tell a damning story about why the order was necessary in the first place.
Bode Animashaun
When President Bola Tinubu signed his executive order on February 13, 2026, mandating that Nigeria’s oil revenues flow directly into the Federation Account rather than through the Nigerian National Petroleum Company Limited, he did something few presidents had dared to do: he cut NNPC off at the money tap.
The reaction from the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) was swift and fierce. Its president, Festus Osifo, called the order a “direct attack” on the Petroleum Industry Act (PIA) — the landmark 2021 law that restructured Nigeria’s oil sector and gave NNPC its current commercial mandate. He accused the presidency of being misled, warned of investor flight, and demanded the order be immediately recalled.
But before accepting PENGASSAN’s arguments at face value, it is worth asking: what, exactly, is being defended here?
What the Executive Order Actually Does
Under the PIA framework, NNPC retained 30 percent of the federation’s oil revenues as a management fee on profit oil and gas derived from production sharing, profit sharing, and risk service contracts. The company also retained another 30 percent of its profit oil and gas as the Frontier Exploration Fund, and an additional 20 percent of its profits for working capital and future investments.
In other words, NNPC was simultaneously Nigeria’s national oil company, a commercial enterprise, and the entity collecting, deducting, and remitting the nation’s oil money — a structural arrangement ripe for opacity and abuse.
The executive order introduces immediate measures to curb leakages, enhance transparency, eliminate duplicative structures, and reposition NNPC strictly as a commercial enterprise while safeguarding the federation’s interests. Going forward, all royalties, taxes, profit oil, and profit gas from production sharing contracts must be paid directly into the Federation Account. NNPC’s management fee and Frontier Exploration Fund deductions are scrapped.
The presidency’s case is straightforward and backed by hard evidence: NNPC has been sitting on Nigeria’s money.
The Revenue Record PENGASSAN Wants You to Ignore
The track record of NNPC’s stewardship over federation revenues is not a matter of opinion — it is documented in audit reports, FAAC minutes, and World Bank assessments.
The World Bank accused NNPC of failing to fully remit oil revenues to the Federation Account, thereby undermining fiscal transparency and macroeconomic stability. The bank noted that while the company was corporatised in 2021 to operate as a commercial entity, it still retains monopolistic control over crude oil sales and foreign exchange inflows, leading to persistent gaps between reported earnings and actual remittances. More damaging still, even after the removal of petrol subsidies, the World Bank observed that NNPC remitted only about 50 per cent of the revenue gains, using the rest to offset past arrears. PIDS
The scale of the problem goes back further. An audit by Periscope Consulting, engaged by the Nigeria Governors’ Forum, accused NNPC of withholding $42.37 billion in oil revenue from the Federation Account between 2011 and 2017. NNPC rejected the findings, but the persistent cycle of audits, counterclaims, and stalemates has weakened trust in the federation revenue system and eroded confidence among states that depend on oil proceeds for survival. PIDS
As recently as late 2025, the government quietly wrote off approximately $1.42 billion and N5.57 trillion in NNPC’s accumulated debts to the federation — essentially absorbing the losses and wiping the slate clean before this new order took effect. Officials argued that fiscal and structural arrangements introduced under the PIA had resulted in off-budget allocations and revenue deductions that diluted federal inflows, and that the action had become urgent due to declining oil and gas receipts despite improved production levels and relatively favourable global prices.
This is the context within which PENGASSAN’s outrage must be evaluated.
Does PENGASSAN’s Legal Argument Hold Water?
Osifo’s constitutional argument — that an executive order cannot override an Act of the National Assembly — is not without merit and deserves fair examination. The PIA is indeed a statute, and the sections he cites (8, 9, and 64) do establish NNPC’s operational and fiscal framework. Legal scholars will debate whether Tinubu’s order encroaches on those provisions.
However, the presidency’s counter-argument is equally grounded in law. The executive order is anchored on Section 44(3) of the Constitution, which vests ownership, control, and derivative rights in all minerals, mineral oils, and natural gas in Nigeria in the Government of the Federation. The directive seeks to restore the constitutional revenue entitlements of the federal, state, and local governments, which the government argues were effectively removed in 2021 by the PIA. In other words, Tinubu is not claiming that he can casually override legislation — he is asserting a constitutional supremacy argument: that the PIA, to the extent it diverted federation revenues away from the Federation Account, was itself constitutionally defective.
That is a substantive legal question that courts may eventually have to resolve. But it is not the frivolous overreach PENGASSAN portrays it to be.
PENGASSAN’s Consistency Problem
A closer look at PENGASSAN’s recent history of policy positions reveals a pattern that raises uncomfortable questions.
In September 2025 — just five months before this controversy — PENGASSAN and its sister union NUPENG jointly opposed the Federal Government’s proposed sale of Joint Venture equities in the upstream sector, warning that handing decisive control to private interests would weaken Nigeria’s sovereign ability to plan, stabilise supply, and respond to economic shocks. That is a legitimate concern about strategic asset divestiture and deserves to be taken seriously.
But in August 2025, Osifo himself warned that constant policy amendments — particularly to the PIA — were discouraging investors and that frequent changes to laws don’t aid stability. He is now using the same investor-confidence argument to oppose a reform that plugs revenue leakages. The irony is sharp: PENGASSAN previously warned against weakening NNPC through privatisation while now defending an NNPC structure that, by the World Bank’s own account, has been shortchanging the federation for years.
It is also worth noting that PENGASSAN eventually backed fuel subsidy removal under Tinubu — a reform far more disruptive to ordinary Nigerians than redirecting management fees to the Federation Account. The union’s selective militancy is conspicuous.
The Jobs Argument: Real or Rhetorical?
Osifo’s most emotive claim is that if the order is not reversed, “our members are in danger of being declared redundant because NNPC may not be able to meet its obligations.” This is a serious warning if true, but it needs scrutiny.
NNPC remitted N12.117 trillion to the federation between January and October 2025, and recorded N4.358 trillion in revenue and N502 billion in profit after tax. A company with those numbers — even after losing management fees and frontier fund deductions — is not on the verge of insolvency. The claim that stripping duplicative deductions will make NNPC unable to pay staff salaries conflates the company’s operating budget with its fee-collection function. These are not the same thing.
PENGASSAN also alleged that the executive order was introduced without broad consultation with key industry stakeholders, heightening concerns about transparency and regulatory certainty, with Osifo noting: “We were not adequately consulted. When policies of this magnitude are introduced without engagement, it creates uncertainty, and uncertainty is the enemy of investment.” That is a procedural complaint worth taking seriously — good policy process matters. But the absence of consultation does not make the policy wrong, especially when its underlying rationale is this strong.
Corruption Fighting Back, or Genuine Reform Anxiety?
The more difficult question is whether PENGASSAN’s pushback is, at its core, an institutional defence of the status quo under which NNPC has wielded enormous financial discretion — discretion that has not always translated into full remittances to the federation.
Nigeria’s oil unions have historically positioned themselves as guardians of the sector’s integrity. Sometimes that role has been genuinely patriotic. But an organisation that resists JV divestiture, opposes PIA amendments, warns against executive orders, and simultaneously insists that the entity responsible for years of documented revenue shortfalls must retain its deduction powers — that organisation owes Nigerians a cleaner accounting of whose interests it is actually serving.
The order forces a commercial transition by removing quasi-sovereign revenue privileges and pushing NNPC closer to operating as a true commercial oil company rather than a hybrid state revenue custodian. That is not an attack on the oil industry. That is what reform looks like.
PENGASSAN’s legal concerns about executive order limits deserve a hearing in court if it chooses to pursue them. But the moral case for keeping NNPC as both the collector and remitter of Nigeria’s oil wealth — given everything we now know about how that arrangement has worked in practice — is very difficult to make.
The Federation Account belongs to all Nigerians. For too long, it has been treated as NNPC’s first stop, not its last.