KEY POINTS
- Experts warn that Tinubu’s executive order may reduce NNPCL’s liquidity and operational flexibility, affecting its ability to meet obligations.
- The move could discourage long-term foreign investment and lead to cost-cutting measures, including potential workforce reductions.
- Overriding key sections of the Petroleum Industry Act may introduce uncertainty, requiring careful management to prevent operational disruptions.
Experts have raised concerns over President Bola Tinubu’s recent executive order directing all oil and gas revenues straight into the Federation Account, warning that this could limit the Nigerian National Petroleum Company Limited, NNPC, cash flow and operational flexibility.
By removing certain revenue retention mechanisms, NNPC ability to meet obligations to vendors, investors, and subsidiaries may be affected, potentially disrupting daily operations.
In an interview, Dr. Muda Yusuf, founder of the Centre for the Promotion of Private Enterprise (CPPE) and former Director-General of the Lagos Chamber of Commerce and Industry (LCCI), emphasised that the redirected revenues were key funding sources for NNPCL’s operational and financial commitments.
He cautioned against subjecting NNPC to the bureaucratic envelope budgeting system, which is prone to delays.
“These are major sources of revenue for NNPC. Ongoing obligations to vendors and investors may now be harder to meet, affecting the company’s operational efficiency,” Yusuf said.
Potential Impact on NNPC Workforce and Investments
Similarly, Dr. Joseph Obele, energy expert and National Public Relations Officer of the Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN, warned that the executive order could weaken operational flexibility and discourage long-term investment.
He also suggested workforce reductions might follow as part of cost-cutting measures.
“NNPCL and its subsidiaries may experience workforce reductions as part of cost-cutting measures,” Obele noted.
