Executive Order 9

 Executive Order 9

•It is necessary to bring incongruous parts of PIA in line with provisions of the 1999 Constitution

It is not entirely surprising that President Bola Tinubu’s Executive Order 9, which essentially seeks to restore the constitutional revenue entitlements of the federal, state, and local governments, which were removed in 2021 by the Petroleum Industry Act (PIA), has generated diverse opinions among Nigerians. Yet, the order, so clearly grounded in logic, the good governance imperative, and the dictates of constitutionalism, is such that should ordinarily leave no room for equivocation.

The issues at the heart of the executive order appear clear enough. Under the PIA framework, the Nigerian National Petroleum Company Ltd  (NNPCL) retained 30 per cent of the federation’s oil revenues as a management fee on profit oil and profit gas derived from production sharing contracts, profit sharing contracts, and risk service contracts. The company also rakes in another 30 per cent of profit under the production sharing, profit sharing, and risk service contracts for Frontier Exploration Fund under sections 9(4) and (5) of the PIA. Needless to state that the government considers the situation an anomaly. In fact, in the thinking of the administration, the provisions not only run against the grain of best practices, they represent an affront to the spirit of the 1999 Constitution.

Even more specifically is the argument by government that the retained 30 percent management fee is neither justifiable nor reflective of global best practices. Same with the 30 per cent Frontier Exploration Fund; it says that the fund of this size, being devoted to speculative exploration, risks accumulating large idle cash balances, which would encourage inefficient exploration spending at a time when government resources are urgently needed for core national priorities.

In all, the government refers to the existing 20 per cent retention as sufficient to support the functions NNPCL performs under these contracts even as it decries the PIA framework, which allows NNPCL to influence operating costs while simultaneously functioning as a commercial entity.

The reasoning by the government is that the situation creates potential competitive distortions and undermines its transition into a fully commercial operator as envisioned under the PIA.

Nigerians might wish to note that the funds in question actually represent more than two-thirds of potential remittances that would have gone directly into the Federation Account. In fact, in 2025 alone, management fees and frontier deductions together amounted to approximately N906.91 billion.

These are primarily the issues.

Expectedly, Nigerians have heard contending arguments such as those from the president of the Nigerian Bar Association, Afam Osigwe (SAN). He says that “the president cannot, by executive order, modify or alter a law. The president doesn’t have the power.”  His fellow silk, Olalekan Ojo, would echo a similar sentiment: “Executive order is like instruments to give effect to executive decisions and laws. Where the law has prescribed a particular thing, the president cannot, by executive order, do the opposite. So, the president does not have the power and cannot use an executive order to amend provisions of the Petroleum Industry Act”.

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With due respect to the learned silks, it would appear they are wrong. The constitution is unquestionably the supreme law of the country. Section 1(3) of the 1999 Constitution (As amended) makes it clear that any law passed by the National Assembly or any other legislative body that is inconsistent with the constitution is null and void to the extent of its inconsistency. Section 80(1) of the same constitution is as unambiguous as can be: all revenues collected by the federation to be paid into a single account known as the Consolidated Revenue Fund of the federation. Furthermore, Section 162 makes it mandatory that revenues accruing to the federation be paid into the Federation Account for distribution according to constitutional allocation principles. To the extent that the particular provisions of the PIA not only gloss over the weighty import of Section 162 but actually derogate from it, it goes without saying that the provision will have to be treated as ultra vires. That, to us, is the basis of the executive order. And the president, sworn to uphold the constitution and the law, cannot in good conscience be seen to nurture, let alone tolerate such an aberration, no matter how good the intention is.

Much as it seems reasonable to expect that the president will in due course seek an amendment to the offending portions of the PIA, the least he could have done in the circumstance and which he has done vide the executive order, is terminate the absurdity foisted by the continuing operations of that aspect of the law.

Aside the issue of law and constitutionalism, there are of course valid concerns with the status of the NNPCL itself under the PIA. For us, it seems utterly incongruous that a company, which by the force of that legislation has transited into a commercial entity, would under any circumstance, be allowed to retain the old structure of rent as the PIA purports to do.

What then is the whole point about the so-called transition in the situation that the company continues to take in such huge revenues, not from its commercial or operational undertakings, but sovereign funds? When will the company start to operate like its peers in other parts of the world, as against the current situation in which it is tethered to the accruals into the federation account while its principals are denied critical funds? Will this particular leopard ever change its spots?

These are the issues. In other words, the executive order is actually an effort to correct a festering anomaly. While the order seems for now the best cure, the expectation, going forward, is that the Federal Government would effect the necessary amendments to the law to ensure its alignment with the constitution.