Investigation into Tinubu’s Oil Revenue Executive Order by NASS Hits a Snag

A joint investigative hearing by both chambers of the National Assembly concerning President Bola Tinubu’s Executive Order on the direct remittance of oil and gas revenues to the Federation Account encountered delays on Thursday. This was sparked by a request from the Minister of State for Petroleum Resources, Heineken Lokpobiri, for additional time to adequately prepare his defense.

The session, organized collaboratively by the Senate and House of Representatives Committees on Petroleum Resources and Gas, aimed to gather insights on the implications of the president's order on Nigeria's oil industry.

In attendance were other key figures, including Bayo Ojulari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), and Oritsemeyiwa Eyesan, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

However, just minutes into the hearing, Mr. Lokpobiri requested more time to study the necessary documents, indicating that he and his team had not been able to acquire the required materials to effectively defend the decision made by the president.

He mentioned that he was informed of the meeting only a day prior but chose to participate in good faith out of respect for the parliamentary process.

Following his request, the Co-Chairman of the joint committee, Agom Jarigbe (APC, Cross River North), who leads the Senate Committee on Gas, called for a voice vote on the proposal. This was backed by the majority of the lawmakers.

Mr. Jarigbe subsequently informed Mr. Lokpobiri that the committee would reach out regarding a new date for his return.

Earlier, during another meeting, the Chairman of the Senate Committee on Finance, Sani Musa, revealed that President Tinubu would soon present proposals to the National Assembly aimed at amending specific sections of the Petroleum Industry Act (PIA) to align with current economic circumstances.

Musa pointed out that, although many believed the executive order would automatically enhance government revenue, the reality was that Nigeria had not yet achieved its targeted revenue levels. He asserted that the initiative to boost revenue generation through this executive order would compel the president to propose necessary amendments to the PIA.

Nevertheless, Musa did not elaborate on which provisions of the law might be revised.

On Wednesday, President Tinubu signed an Executive Order requiring that royalties from oil, as well as taxes, profit oil, profit gas, and other revenues owed to the Federation due to production-sharing, profit-sharing, and risk-service contracts be paid directly to the Federation Account.

This directive effectively eliminated the 30% Frontier Exploration Fund that had been established under the PIA and ceased the 30% management fee on profit oil and profit gas retained by the NNPCL.

The presidency based this decision on Sections 5 and 44(3) of the 1999 Constitution (as amended), stating that its purpose was to protect oil and gas revenues, curtail what they termed excessive deductions, and restore the constitutional entitlements of federal, state, and local governments to the Federation Account.

Nonetheless, this decision has drawn criticism from various stakeholders within the oil and gas sector. The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) expressed its disapproval of the order, characterizing it as a harmful precedent that could undermine the PIA and diminish investor confidence.

Festus Osifo, the association’s president, voiced concerns during a press briefing, demanding the immediate withdrawal of the directive.

The PIA, which received presidential assent in 2021, was intended to overhaul Nigeria’s oil and gas sector comprehensively, establishing a modern governance, regulatory, and fiscal framework after nearly two decades of stalled reforms. It encompasses the commercialization of NNPCL as a limited liability company, the establishment of new regulatory bodies for upstream and midstream/downstream functions, a restructuring of revenue-sharing arrangements, and the introduction of provisions for community development within host locales.