Analysts have raised alarms over the potential liquidity crunch for the Nigerian National Petroleum Company Limited (NNPCL) following President Bola Tinubu’s executive order requiring oil and gas revenues to be remitted directly to the Federation Account. Experts say the move, which overrides some revenue retention mechanisms under the Petroleum Industry Act (PIA) 2021, could limit the company’s ability to meet obligations to vendors, investors, and ongoing operational expenses.
Dr. Muda Yusuf, founder of the Centre for the Promotion of Private Enterprise (CPPE) and former Director-General of the Lagos Chamber of Commerce and Industry (LCCI), highlighted the risk to cash flow. “These are major sources of revenue for NNPC. Removing them may impact the company’s ability to operate efficiently,” he said. Dr. Joseph Obele, energy expert and PETROAN official, added that the directive could weaken operational flexibility and discourage long-term investments, potentially leading to workforce reductions as part of cost-cutting strategies.
Signed on February 18, the executive order mandates direct remittance of oil and gas revenues into the Federation Account. Key affected provisions include the 30% Frontier Exploration Fund, the 30% NNPCL management fee on profit oil and gas, and the redirection of gas flare penalties. Analysts warn that bypassing Sections 8, 9, and 64 of the PIA could create regulatory uncertainty, complicating the company’s financial and operational planning.
While the executive order raises concerns, it also presents potential benefits. Centralizing revenues may enhance fiscal transparency, reduce leakages, and improve public oversight, potentially boosting allocations to federal, state, and local governments. Conversely, risks include liquidity constraints for NNPCL, reduced operational flexibility, bureaucratic delays under envelope budgeting, investor uncertainty, and possible job losses.
Organized labor groups, including PENGASSAN and NUPENG, have expressed disapproval, warning that the policy threatens staff welfare and operational autonomy. The federal government maintains that the directive aligns revenue flows with constitutional provisions and safeguards national resources. Experts stress that careful management of the transition is critical to avoid operational shocks, and call for stakeholder consultations to ensure NNPC remains a viable and strategic institution for Nigeria.
source: nairametrixs