Unions Raise Alarms Over Government’s Plan to Divest Stakes in Oil and Gas Assets
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) have strongly opposed the government’s proposal to divest significant shares in joint venture (JV) assets managed by the Nigerian National Petroleum Company Limited (NNPC Ltd). The unions argue that such a move could have far-reaching consequences for the country’s economic stability, the oil industry, and the welfare of workers.
They expressed concerns that the proposed changes to the Petroleum Industry Act (PIA), which would remove the running of oil and gas operations from NNPC Ltd, could endanger the nation’s economy and weaken its oil sector. According to the unions, these policies are not only risky but also potentially lead to the bankruptcy of NNPC Ltd. The oil workers have called on President Bola Tinubu to intervene and stop the plan from moving forward.
A Call for Economic Review and Reassessment
Last month, the president directed a comprehensive review of NNPC’s 30% management fee and 30% frontier exploration deduction under the PIA. He tasked the Economic Management Team, led by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, with providing actionable recommendations to the Federal Executive Council (FEC) on the best way forward.
In his statement, the president emphasized the need to optimize savings and enhance spending efficiency. This includes reviewing deductions from the Federation Account, such as costs incurred by revenue agencies like the Federal Inland Revenue Service (FIRS), Customs, the National upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian Maritime Administration and Safety Agency (NIMASA).
He also highlighted the importance of reassessing the 30% management fee and 30% frontier exploration deduction by NNPC, especially in light of global liquidity constraints. The goal is to ensure that every available Naira is used effectively to sustain growth and development.
Concerns Over Short-Sighted Policies
At a joint briefing in Abuja, PENGASSAN President Festus Osifo and NUPENG leader Williams Akporeha warned that the proposed sale of government stakes in JV assets could undermine national revenue and jeopardize the future of coming generations. They described the plan to reduce the government’s stake from 55-60% to as low as 30-35% as short-sighted and dangerous.
The unions pointed out that past divestments by international oil companies such as ENI, ExxonMobil, and Shell saw their Nigerian operations taken over by domestic firms. They argued that further sales of government stakes would leave NNPC Ltd weakened, unable to meet critical obligations such as paying salaries, benefits, and contributing to the national budget.
Osifo emphasized that the government’s rationale for selling off parts of its stake is to generate quick cash for other areas. However, he stressed that this approach could lead to the company’s eventual bankruptcy if allowed to continue.
A Threat to National Interests
Osifo added that the government’s plan to reduce its stake in JVs raises serious concerns about the future of NNPC Ltd. He noted that the federation owns all crude oil assets and oil wells in Nigeria, and NNPC Ltd manages these on behalf of the federation. He urged the government to reconsider its approach, warning that allowing this plan to proceed could have devastating consequences.
The unions also raised alarms about alleged moves to amend the PIA, passed in 2021 after years of debate. They claimed that the Ministry of Finance is attempting to remove the Ministry of Petroleum from joint ownership of NNPC Ltd, which they see as an aberration and a backdoor attempt to take control of the company.
Impact on Investor Confidence and National Stability
According to the union leaders, such amendments would strip NNPC Ltd of its core national role, erode investor confidence, and ultimately drive the company into bankruptcy. They condemned the proposed changes as incorrect and entirely wrong, emphasizing the need for the government to act responsibly.
They also criticized the inconsistency in oil sector reforms, noting that the PIA has not had enough time to stabilize before attempts to amend it. Akporeha pointed out that investors are still learning how to navigate the new framework, and sudden changes could scare away investment. He highlighted that every oil-producing nation protects its national oil company, yet Nigeria appears to be doing the opposite.
A Strong Warning to the Government
The unions issued a strong warning to the government, urging it to cease the proposed changes immediately. They called on President Tinubu to take action and bring the relevant parties, including the Minister of Finance, the Board Chairman of NNPC Ltd, and the Group Chief Executive Officer (GCEO), to order.
They stressed that the current direction is not aligned with the country’s interests and that the government must prioritize long-term stability over short-term gains. As they put it, “It’s teaching time, save time.”
