Oil-Producing States Sue FG Over PIA Revenue Deductions, Court Adjourns for Settlement Talks
Oru Leonard
Eight oil-producing states
have asked the Federal High Court in Abuja to declare unconstitutional some provisions of the Petroleum Industry Act (PIA) 2021 that permit the Nigerian National Petroleum Company Limited (NNPC Ltd) to deduct 60 per cent of revenue from profit oil and profit gas before remitting the balance to the Federation Account.
The plaintiffs — Delta, Bayelsa, Edo, Anambra, Ondo , Akwa Ibom ,Imo and Abia states — instituted the suit in June 2023 against NNPC Ltd, the Federal Ministry of Petroleum Resources, the Attorney General of the Federation, the Accountant General of the Federation, the Federal Ministry of Finance, and the Revenue Mobilisation, Allocation and Fiscal Commission.
Speaking after Tuesday’s proceedings, lead counsel to the plaintiffs, Barr. Abang Odok Ogar of Abang Odok Ogar & Co, said the suit challenges Sections 9 and 64 of the Petroleum Industry Act, arguing that the provisions conflict with Section 162 of the 1999 Constitution.
According to Ogar , the contested sections empower NNPC Ltd to retain 60 per cent of revenue from profit oil and profit gas for exploration activities and management fees while remitting only 40 per cent into the Federation Account, from which the constitutional 13 per cent derivation is calculated and paid to oil-producing states.
The Lead Counsel maintained that the Constitution requires that 100 per cent of revenue generated from crude oil and gas sales be paid directly into the Federation Account before the 13 per cent derivation is distributed to oil-producing states.
“The deductions have substantially reduced the revenue accruing to the Federation Account and, by extension, the 13 per cent derivation allocation due to oil-producing states and their communities,” Ogar stated.
At the hearing on July 7, counsel representing the Attorney General of the Federation, the fourth defendant, requested for a further adjournment to allow parties explore an out-of-court settlement.
The Federal High Court granted the application and adjourned the matter until November 2, 2026, when parties are expected to report on the outcome of the settlement discussions.
