Fresh tension has emerged in Nigeria’s oil and gas industry following the opposition of the Petroleum and Natural Gas Senior Staff Association of Nigeria to proposals calling for the direct remittance of crude oil revenues to the Federation Account Allocation Committee.
PENGASSAN argues that bypassing existing institutional frameworks could weaken regulatory safeguards, disrupt cash flow structures in the petroleum sector and create uncertainty for operators already adjusting to reforms under the Petroleum Industry Act.
At the centre of the debate is the role of the Federation Account Allocation Committee, the body responsible for sharing federally collected revenue among the federal, state and local governments. Advocates of direct remittance believe oil proceeds should go straight into the Federation Account to improve transparency and ensure timely distribution. PENGASSAN, however, contends that the proposal oversimplifies a complex revenue chain.
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Union officials maintain that oil revenue does not move in a single stream. Proceeds from crude oil sales pass through multiple stages, including cost recovery, joint venture cash calls, production sharing arrangements, royalty payments and operational expenses. According to the union, redirecting gross oil earnings directly to FAAC without accounting for these obligations risks distorting contractual commitments and discouraging investment.
PENGASSAN also points to the restructuring of the national oil company under the Petroleum Industry Act. The transformation of the former state oil corporation into a limited liability company was designed to promote commercial discipline and operational independence. The union argues that automatic diversion of revenues before statutory deductions could undermine that commercial model and erode investor confidence.
Another concern raised by the union is the potential impact on cash flow management in the upstream and midstream segments. Oil and gas projects require steady funding for exploration, production maintenance and infrastructure upgrades. PENGASSAN warns that uncertainty in revenue allocation could delay projects, affect employment levels and reduce output at a time when Nigeria is striving to stabilise production and increase foreign exchange earnings.
Labour leaders further insist that transparency and accountability can be strengthened without dismantling established revenue processes. They advocate stricter oversight, real-time reporting and enhanced auditing mechanisms rather than structural changes that could introduce new administrative bottlenecks.
Economists observing the dispute note that the call for direct remittance is partly driven by concerns over revenue leakages and fiscal pressure on government finances. With public debt and debt servicing costs rising, there is growing demand for clearer visibility on oil earnings, which remain a major source of national income. PENGASSAN counters that policy stability, not abrupt financial reengineering, will yield sustainable gains.
The union’s stance reflects broader anxiety within the industry over frequent policy shifts. Stakeholders recall past reforms that altered fiscal terms and contractual structures, sometimes leading to arbitration disputes and project delays. In that context, PENGASSAN argues that maintaining predictable revenue frameworks is essential to protect jobs and sustain production.
As discussions continue among policymakers, regulators and industry players, the disagreement highlights a familiar tension in Nigeria’s oil economy. On one side is the push for greater fiscal transparency and faster revenue distribution. On the other is the need to preserve commercial viability and contractual certainty within a capital-intensive sector.
Whether a compromise emerges will depend on how authorities balance public finance priorities with industry stability. For now, PENGASSAN’s position signals firm resistance to any move that it believes could disrupt the financial architecture of Nigeria’s oil and gas operations.
