Fresh questions, concerns, and uncertainty have deepened at the oil and gas agencies affected in the wake of President Bola Tinubu’s new executive order directing immediate reallocation of oil and gas revenues to the Federation Account for onward distribution among the three tiers of government.

The PUNCH gathered on Sunday that the directive, which effectively halts the retention of certain internally generated revenues by agencies in the sector, has sparked deep concerns within the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian National Petroleum Company Limited, and the board and management of the Midstream and Downstream Gas Infrastructure Fund.

The uncertainty, according to industry operators and experts, centres on the absence of a clearly defined alternative funding model for the NUPRC to meet its statutory obligations following the reallocation of oil and gas royalties to the Federation Account.

They also rejected a possible solution of conventional budgetary funding and approval through the National Assembly, insisting that such a move would undermine NUPRC’s operational independence and efficiency.

They noted that relying on annual budget approvals and capital releases from the Ministry of Finance could expose the regulator to bureaucratic delays, political pressures, and funding uncertainties that may weaken its ability to carry out core oversight, monitoring, and enforcement functions in the upstream sector.

The sources also noted that questions persist over how the government intends to sustain and improve the country’s Reserve Replacement Ratio, particularly as the financing framework for frontier exploration activities remains unclear.

They added that the recent directive has created fresh ambiguity around the roles and operational scope of the Frontier Exploration Services and the Midstream and Downstream Gas Infrastructure Fund, amidst the country’s aim to increase crude production to about three million barrels per day by 2030 and attract fresh investments estimated at over $12bn annually.

At the NUPRC, two senior officials, who spoke on condition of anonymity because they were not authorised to comment publicly, argued that the statutory funding framework provided under the Petroleum Industry Act was deliberately designed to shield the commission from such constraints and ensure timely decision-making in a highly technical and sensitive industry.

Section 12 of the PIA 2021 empowers the commission to appoint staff and determine their terms and conditions of service, including remuneration, allowances, and benefits.

The Act mandates that these packages be designed to ensure the commission can recruit and retain highly skilled professional personnel, “and remuneration and allowances paid in the private sector in upstream petroleum operations to individuals with equivalent responsibilities, expertise, and skills.”

They lamented that the order may negatively impact the ability of the commission to perform these functions of matching salary payments to be competitive with international oil companies.

The PUNCH recalls that the commission paid about N88bn as salaries and allowances to its staff in 2024, while it also generated approximately N322.8bn in 2025 from the four per cent cost of collection, which serves as a major funding source for operations and welfare.

One top official said, “We are a government agency, and we have commenced implementation. But implementation does not remove the questions. An Act is an Act. The Petroleum Industry Act clearly provides for how the commission is funded, including the four per cent cost of collection. Can an Executive Order override an Act of the National Assembly?”

He continued, “The four per cent cost of collection is not a privilege; it is our statutory funding mechanism. That is what funds our operations, salaries, monitoring activities, field inspections, security logistics, and even staff welfare. Now that this has been directed to be paid straight into the Federation Account, what is the alternative source of funding for the commission?”

According to the official, the commission’s salary structure and welfare package were deliberately designed under the Petroleum Industry Act to be competitive with international oil companies in order to attract and retain top technical talent.

“Our Act says our remuneration should be competitive with the industry. If you take away the funding source and return us to envelope budgeting like conventional ministries and agencies, how do we maintain that standard? Are we now going to queue before the National Assembly every fiscal year to defend basic operational funds? That process is not only stressful, but it exposes a technical regulator to bureaucratic delays that can cripple efficiency,” the source stated.

Another senior source warned that funding uncertainty could have broader consequences beyond administrative inconvenience.

“When you weaken a regulator in a sector as sensitive as upstream oil and gas, you create room for compromise. If salaries are delayed or welfare is threatened, you increase the risk of sabotage. This sector is already exposed to oil theft and pipeline vandalism. Funding instability can translate into security implications. That is not something the country should take lightly,” the official said.

The source added, “We don’t even understand this executive order. It is a double-edged sword with two tails. On one hand, the frontier exploration fund is meant to de-risk the frontier to increase the reserves of the country. But since the beginning of the fund, it hasn’t been established 100 per cent and not fully executed.

“Now, it has been suspended, which brings us to those questions: what direction are we taking? How do we talk about additional reserves and derisk the frontier? So many questions to be answered.

“In terms of our operational funding, the NUPRC is the government regulator in the oil and gas industry, so whether the funding is there from its internally generated revenue or not, the government would have to find a way to fund it. That is one thing I know for sure. Your regulator is your eye in the industry, and without them, these little funds, what you are expecting, won’t be gotten. Everything will not go well. So the government will have to find an alternative, but what it is, we don’t know. Another question is how the government will derisk the frontier now, going forward,” the official queried.