March 15, (THEWILL) — The Nigerian Petroleum Industry has been hit by challenges in recent time. One of the most recent challenges was the irreversible disruption of the market by Dangote, the sabotage from those whom we thought were his friends and the ‘bolekaja’ response of genuine and fake interested parties. Another trouble was the axing of Mele Kyari and his replacement with Engr. Bayo Ojulari, who kicked off with a tempestuous start when he was said to have resigned before the news went into voicemail. Of course, there are other issues, such as whether they were paying subsidy or not, the relationship with Oando, which bought or resold all or some of the fuel stations, the culture of the President being the Minister of Petroleum (or rather the Minister of NNPC) and the incestuous relationship between the opaque oil octopus and the President or the amorphous presidency.
There was a perception of calmness when the Minister of Petroleum, in his capacity as the President, issued the Executive Order 9 of 2026 (EO9-2026) on February 13, 2026. The EO9-2026 abolished the 30 percent management fee and 30 percent retention for frontier exploration funds so that all government revenues from oil and gas are paid directly into the Federation Account. It was aimed at restoring the ‘constitutional revenue entitlements for all tiers of government’.
The practical objective is to increase what should be SHARED. In a sharing economy, everything is about what is shared, whether through subsidy ‘removal’ ‘restructuring’ the foreign exchange market or overhauling of the tax system. No attention is paid to the crucial question, ‘where does the money go?’
This Order has troubled the waters in monumental proportions, even though there are no open rumbles and grumbles. Nobody dares do that! I wish to state upfront that I never liked this ‘Executive Order’ business. In a pretend-democracy state, with three arms of government, it is anomalous and oppressive for one arm to just decree whatever and it comes to be. This is more military than democratic.
I admit, though, that we have been acting like a one-armed democracy as two of the arms willingly and intentionally surrendered their arms to, or merged their arms with, that of the executive. While admitting that I am not a petroleum economist, I want to ‘put mouth’ into how this EO9-2026 interfaced with the Limited status of NNPC and its relationship with the PIA , the ‘Grundnorm’ of petroleum operations in Nigeria.
The Petroleum Industry Bill (PIB), was expected to last, maybe, 20 months in the National Assembly (NASS); but it eventually lasted for about 20 years in the legislative wilderness as Oil Majors were scheming to ensure that we do not earn the desired oil independence.
The Niger Delta elders were, on their side, strived to ensure that a particular group “does not take our oil’, and that the frameworks for sharing oil windfalls remained opaque. The relevant NASS committees wanted to keep the Bill as long as possible so as to corner lobbying and siting allowances and the Presidency wanted to ensure that they continued with their chokehold on the oil sector operations. This was evident as it had become the norm for the President to be the Minister of Petroleum, or better still, the ‘minister’ of the Nigerian National Petroleum Corporation Limited (NNPCL) and allied matters.
The PIB was signed into Law by a repentant and autocrat-turned democrat, then President Muhammadu Buhari. The Act was aimed at reforming the petroleum industry, promoting transparency (wishful thinking) and attracting investments. Section 64 of the Petroleum Industry Act (PIA) has a provision for NNPCL management fee.
The NNPCL, which was first established in 1977, operated as a parasitic parastatal within the federal bureaucracy. However, in line with the spirit of PIA, it became a Limited Liability Company on 19th July, 2022. Since then, the question had been if it was, and is possible, for the NNPCL to assert its ‘Llimitedness’ or wean itself off the suffocating control of the government, or for the government to let go of its most beautiful financial bride, which became one of the departments in the presidency when the ‘Olori-Oko’ (Lord of the Farm) became the Minister of Petroleum).
But the transformation to a Limited Liability Company, even though a private one, was received with cautious optimism by stakeholders and watchers of the oil industry.
Dr Reuben Abati, who is an ancestor of sorts in this writing business, wrote an extensive and incisive treatise on the birth of NNPCL. In an article, which was published in The Guardian on the birthday of NNPCL, he declared that “The new NNPC is expected to do things differently to attract investment, promote innovation, eliminate corruption and inefficiency, and ensure clarity. It must measure up like Saudi Arabia’s Aramco, and Brazil’s Petrobras. Its business model must work for the country’s benefit”.
Abati, however, went on to warn us not to jubilate so early because the “NNPC still remains in the public sector. That is why it is still called Nigerian National … The only difference is that as a commercial entity, it will now have to pay more attention to its profit and cost centres.”
While there is a limit to which it can dictate price and profit, it must be noted that it can no longer do business ‘as usual’. He also recalled the sure-footed statements of Kyari under whose tenure NNPC published its first P&L account, that: (i) NNPCL going forward is responsible to its shareholders as a limited liability company, (ii) whatever service it provides for the Federal Government would be for a fee, (iii) subsidy is not the responsibility of the NNPCL, but that of the Federal Government, and (iv) NNPCL is committed to transparency, accountability, and accounting rules.
The author, Ik Muo is of the Department of Business Administration, Olabisi Onabanjo University, Ago-Iwoye, Ogun State.
