NNPC, NUPRC Sound Alarm Over Tinubu’s New Directive

Fresh uncertainty has gripped key institutions in Nigeria’s oil and gas sector following President Bola Tinubu’s executive order mandating the immediate remittance of oil and gas revenues into the Federation Account for distribution among the three tiers of government.

Industry sources said the directive, which effectively ends the retention of certain internally generated revenues by agencies, has raised concerns within the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian National Petroleum Company Limited (NNPCL), and the Midstream and Downstream Gas Infrastructure Fund (MDGIF).

At the centre of the debate is the absence of a clearly defined alternative funding structure for the NUPRC, particularly after the redirection of royalties and the four per cent cost-of-collection framework established under the Petroleum Industry Act (PIA) 2021.

Senior officials at the commission, who spoke anonymously, argued that the PIA deliberately insulated the regulator from bureaucratic bottlenecks by granting it financial autonomy. They warned that reverting to conventional annual budgetary allocations through the National Assembly and the Ministry of Finance could expose the commission to delays, political pressure, and operational constraints.

According to them, the four per cent cost of collection has been the backbone of the commission’s operations, covering salaries, field inspections, monitoring, and enforcement. They questioned whether an executive order could override provisions of an Act passed by the National Assembly, noting that the commission’s remuneration structure was designed to remain competitive with international oil companies in order to attract and retain highly skilled professionals.

One official cautioned that weakening the funding base of a technical regulator in a sector as sensitive as upstream oil and gas could have far-reaching consequences, including security implications in an industry already challenged by crude theft and pipeline vandalism.

Questions have also emerged over the future of frontier exploration funding and how the country intends to improve its Reserve Replacement Ratio, particularly as Nigeria aims to boost crude output to about three million barrels per day by 2030 and attract annual investments exceeding $12bn.

Within NNPCL, concerns have reportedly surfaced about how the directive could affect production sharing contracts (PSCs), staff deployment, and long-term reform efforts, especially amid discussions about a potential stock exchange listing.

Senior officials said hundreds of staff oversee PSC operations across dozens of sites, including deepwater assets responsible for a significant share of production. They explained that royalties and taxes under PSCs are typically received in barrels of crude, not cash, and are sold before proceeds are remitted to the Federation Account. Any abrupt alteration of this process, they warned, could disrupt contractual frameworks and investor confidence.

One official also raised concerns about crude-backed loans secured in recent years, noting that portions of production are already tied to debt servicing. Redirecting revenues without clear guidance, he said, could raise questions among lenders and complicate future capital-raising efforts.

However, another senior company official adopted a more measured tone, stating that NNPCL remains financially stable and would adjust to the new fiscal regime. He said production, gas processing, and ongoing projects would continue uninterrupted, adding that management was reviewing its capital allocation strategy to align with the evolving policy environment.

The MDGIF is also reviewing the implications of the directive on its revenue framework, given its mandate to fund gas infrastructure across the midstream and downstream segments.

While apprehension lingers among regulators and operators, some industry stakeholders have welcomed the move. The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) praised the executive order, describing it as a bold step toward fiscal discipline and transparency. Its leadership said centralised remittance of revenues would enhance accountability, strengthen budget implementation, and reposition NNPCL as a commercially driven entity.

Labour unions, however, have called for urgent consultations. The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) urged the President to convene a broad stakeholders’ meeting to clarify the scope and implications of the order, citing growing anxiety among workers over job security and labour agreements.

Similarly, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) rejected the directive, arguing that it threatens operational autonomy and staff welfare. The union has scheduled an emergency meeting to determine its next course of action.

The Minister of State for Finance and Chairman of the Federation Account Allocation Committee, Doris Uzoka-Anite, has directed agencies to cease deductions and off-budget retentions immediately, emphasising that Section 162 of the Constitution requires all federation revenues to be paid into the Federation Account without deduction.

Experts have advised caution. Economist Muda Yusuf warned that forcing strategic institutions like NNPCL and NUPRC into the traditional budget envelope system could impair efficiency and disrupt contractual obligations if not carefully managed.

Energy law scholar Professor Ayo Ayoade of the University of Lagos also raised legal concerns, noting that executive orders cannot override Acts of the National Assembly. He stressed the administrative complexity of direct remittance, given that oil revenues are often received in kind and tied to contractual and debt obligations.

Meanwhile, the Executive Chairman of the Nigeria Revenue Service, Zacch Adedeji, defended the reform, stating that it was designed to eliminate “cost of collection” practices and ensure all revenues pass through the formal budgetary process. He emphasised that regulatory agencies should focus on their mandates rather than depend on retained revenue streams.

As implementation begins, attention is shifting to the National Assembly, where affected agencies may seek legislative clarification. The unfolding debate is shaping up to be a significant test of the balance between executive authority and statutory independence in Nigeria’s oil and gas sector.