Former president of the Nigerian Bar Association, NBA, and Senior Partner at Olisa Agbakoba Legal (OAL), Dr. Olisa Agbakoba (SAN), Monday called for the privatisation of the Nigerian National Petroleum Company (NNPC) Limited and a phased exit from joint venture and Production Sharing Contract (PSC) arrangements with international oil companies to strengthen efficiency and transparency in the oil sector.
He also has commended President Bola Ahmed Tinubu for signing the Executive Order 9 (EO9) mandating the direct remittance of oil and gas revenues to the Federation Account, describing the move as a decisive step toward reclaiming Nigeria’s fiscal sovereignty.
Relatedly, the Director General, Budget Office of the Federation (BoF), Tanimu Yakubu, Monday said the EO9, mandating the direct remittance of oil and gas revenues to the federation account, does not amount to an intrusion into legislative competence.
The DG Budget spoke against the backdrop of concerns that the EO9 amounted to an incursion into law making by the President.
Agbakoba who made his remarks Monday, in a formal submission on behalf of OAL to the Implementation Committee, chaired by the Minister of Finance, Mr. Adebayo Olawale Edun, applauded the president for what he called a bold constitutional intervention.
According to him, “For years, Nigeria’s sovereignty over its most critical natural resources has been effectively abdicated through layers of unjustified deductions and structural arrangements that drained public revenue.
“This Executive Order begins the vital work of restoring to the Federation the revenues constitutionally due to the federal, state and local governments under Section 162 of the 1999 Constitution (as amended). It is a commendable and courageous action.”
He noted the Order addresses long-standing concerns about the fiscal architecture of the Petroleum Industry Act (PIA), which he argued has failed to adequately protect the Federation’s revenue interests.
“The significance of this Order cannot be overstated. Nigeria’s fiscal challenges, debt sustainability pressures, revenue shortfalls, and constrained public investment are in no small measure attributable to the erosion of oil and gas revenues under the existing PIA framework.
“This directive has the potential to unlock substantial incremental revenues and restore public confidence in the transparency and accountability of the sector.”
Agbakoba explained the EO9 eliminates the management fee on Profit Oil and Profit Gas, redirects Frontier Exploration Fund proceeds to the Federation Account, mandates direct payment of Royalty Oil, Tax Oil, Profit Oil and Profit Gas by operators, and suspends gas flare penalty payments into designated funds.
However, he maintained that while the Order was revolutionary, it does not go far enough.
“NNPC Limited remains an amorphous entity whose precise role and legal character are still undefined,” he stated, referring to the Nigerian National Petroleum Company Limited.
“Our position is clear: NNPC should simply be an oil company with no statutory functions. It should be privatised. Nigeria does not need a state oil company participating in commercial operations. The government’s role should be limited to collecting rents and taxes.”
He added that NNPC has historically absorbed between 50 and 70 per cent of public oil and gas revenues through various structural mechanisms, a trend he said undermines the constitutional intent of Section 162.
It is important to note that Section 162 of the 1999 Constitution (as amended) establishes the Federation Account and mandates that all revenues collected by the Government of the Federation, except those expressly exempted, must be paid directly into that account.
It provides that these funds shall be distributed among the federal, state and local governments in accordance with a revenue allocation formula approved by the National Assembly, thereby creating a constitutional framework for the sharing of nationally generated income.
The section also entrenches the principle of derivation, requiring that not less than 13 per cent of revenue derived from natural resources be returned to the producing states.
In addition, it mandates that each state to maintain a State Joint Local Government Account into which allocations meant for local governments are paid. Overall, Section 162 is intended to ensure transparency, equitable distribution and constitutional protection of revenues accruing to the Federation.
On international oil companies (IOCs), Agbakoba argued that while Section 2(3) of the Executive Order redirects payment channels under PSC, it leaves intact the deeper structural problems within Joint Venture (JV) and PSC frameworks.
“The fundamental problem is not simply where payments are made, but the underlying contractual frameworks that determine how much is paid, by whom, and on what terms.
“Under existing JV and PSC arrangements, cost recovery structures and profit-sharing formulas often suppress the Federation’s net revenue. Section 2(3) does nothing to disturb these underlying economics.”
He therefore urged the Implementation Committee to incorporate a phased withdrawal programme from JV and PSC arrangements with IOCs, structured over a defined transition period.
“A properly structured, legislatively backed phased transition will respect Nigeria’s treaty obligations while ensuring that our constitutional sovereignty over petroleum resources translates into economic reality. Abrupt abrogation may trigger arbitration, but a managed transition removes that risk and restores fairness to the fiscal regime,” he added.
Agbakoba reaffirmed OAL’s readiness to support the committee’s work and the broader review of the PIA.
“Our objective is simple: Nigeria’s most critical economic sector must be governed by a legal and regulatory framework that fully serves the national interest and protects the constitutional revenue entitlements of all three tiers of government.”
In the meantime, the BoF, Tanimu Yakubu, on Monday said the EO9 does not amount to an intrusion into legislative competence.
The DG Budget spoke against the backdrop of concerns that the EO9 amounted to an incursion into law making by the President.
However, in a statement, Tanimu said EO9 does not create law but rather enforces constitutional custody of federation revenues.
The BoF boss, who doubles as Secretary, Implementation Committee on Executive Order 9, further argued that “Section 80(1) of the Constitution (1999, as amended) is mandatory: all revenues or other moneys raised or received by the Federation shall be paid into and form one Consolidated Revenue Fund of the Federation.”
He stressed that public revenue cannot, therefore, lawfully be retained, applied, or warehoused outside constitutional funds.
According to him, “Section 162 complements this rule by requiring revenues accruing to the Federation to be paid into the Federation Account for distribution in accordance with constitutional allocation principles.
“The order of legality is clear: revenue must first enter constitutionally recognised accounts before it can be appropriated, shared, or spent.
“EO9 operationalises these provisions in the oil and gas sector by directing direct remittance of petroleum revenues—including royalties, taxes, profit oil and gas, penalties, and related receipts—into constitutionally recognisedaccounts, and by tightening reconciliation and transparency across collection, custody, and reporting.”
Tanimu stated that EO9 does not intrude into legislative competence, adding that “Section 60(1) preserves the procedural autonomy of the National Assembly; EO9 does not regulate legislative procedure, amend the Petroleum Industry Act (PIA), or repeal any statute.”
The EO9 remained an executive instrument issued under Section 5 to ensure faithful execution of the constitution and applicable laws.
He said, “If any party disputes the constitutional validity of EO9, the judiciary remains the proper forum for determination.
“Pending any judicial pronouncement, the executive is duty-bound to protect Federation revenues, uphold constitutional supremacy, and strengthen fiscal integrity for FAAC distributions, budget credibility, and macroeconomic stability.
James Emejo, Sunday Ehigiator
