2 Years Of PIA: Oil Producers’ Unpaid 3% Benefit Hits 100bn

 

Oil and gas host communities in the country have decried the persistent non-payment of the three per cent annual contribution that should accrue to them under the Petroleum Industry Act, more than two years after the Act was passed, even as they said the outstanding payment has reached N100 billion

This is as they backed the ongoing draft amendment of the host communities trust funds regulations embarked by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

National chairman, of the Amalgamated Host Communities Producing Oil and Gas, Dr. Mike Emuh, who addressed some select journalists at the Phase 4 Consultation Forum on Draft Regulation Pursuant to the PIA 2021 in Abuja, noted that apart from the delay in the implementation of the PIA, the law gave too much power to the settlers, therefore, there was the need for amendment so that the host communities could appoint the Board of Trustees and register the same at the Corporate Affairs Commission (CAC).

He explained that the stakeholders’ consultation forum and the draft amendment to the host community regulations were great, however, frowned at the much power given to the settlor to appoint the Board of Trustees (BoT) for the implementation of the 3% PIA.

“This is a welcome development, but a situation where power is much given by the law to the settlor, and the Landlord to become a tenant is an aberration. Settlor should not be a body to appoint the Board of Trustees (BoT) Members, at the same time the management committee, and at the same time the supervisory committee.

“The selection and appointment of BoT members should be a host community work because the host community presented their position paper throughout all these years. And so, for settlor now to appoint their cronies and register them at CAC to run the 3% trust fund is a problem”, he said.

He, however, said those fighting against the draft amendment by the NUPRC are only fighting for personal aggrandisement.

He, therefore, urged everyone to come together for the effective implementation of the 3% PIA.

“Two years now, we are living under “shall be”, the law has been passed but has not been implemented.

“Over N100 billion has now been accumulated and the IOCs and Settlors need to pay to the host communities. I don’t know why that money has not been paid.

“As I speak with you, the gas flare penalty level, N98 billion approved, has been pending all these years. A pipeline surveillance contract has not been awarded to the host communities.

“So let us avoid arguments. Let’s see how we can appoint the board of trustees, the management committee, and the supervisory committee based on the PIA, so that we can commence, and those who are arguing should argue in the interest of the masses, not against the masses, not against the settlor, not against the regulator. But all of our arguments should be in favour of everybody”, he said.

Also speaking, a HOSTCOM Consultant, High Chief George Bucknor said, “the regulation that they are trying to establish today by NUPRC is to ensure that host communities get their benefits. If you look at how the commission has drafted it, you will find out that it’s all to help the host communities derive their benefits and participatory rights.

“And if you look at those contesting or countering most of the draft, you’ll find out that most of them are representatives of the oil companies and we are watching closely.

“We support the commission because, for instance, the word Host comply was not in the PIA. HostComply simply means that the oil companies should comply with the host community’s development and rights”, he said.

He explained that in order to resolve the issue of 3% submission, “the NUPRC has established, the host comply, where the oil company will submit their annual budget because the 3% OPEX is the 3% annual contribution of the oil company, so now when you submit your annual budget, it’s an automated software, automatically it will cut out the 3% OPEX. Now they are trying to be smart thinking of how to counter that draft by NUPRC.

“What they are doing today is in favour of host communities and those who are contesting against it are those who know that their business as usual has come to an end”, he said.

Explaining further, he said, “the three per cent OPEX is the contribution of the oil companies whom they call settlors to the host communities, that three per cent is the three per cent operating expenditure. Now we are discussing the 100 per cent of the per cent that is the one that is broken down into 75 per cent, five per cent, and 20 per cent.

“75 per cent is for the budget to develop projects. 20 per cent is for investment on behalf of the host communities. Five per cent is administrative costs which the ACT empowered the settlors to administer over the communities but somewhere in the regulation there is a place that is not very comfortable, that the host community development trustees should not be held responsible for non-performance, it is wrong”, he said.

High Chief Bucknor said, “Recently you heard of the host communities’ kick that was a lie from the pit of hell We are the host community. We are the mouthpiece of the downtrodden, we have never held any meeting to tell the world that the HostComply is not in our favour. Whereas the HostComply is in our own interest”.

Asked whether the communities were divided on the draft amendment regulation, the Head, Compliance and Enforcement, NUPRC, Kingston Chikwendu, said he has not observed any division.

On the contrary, he said, everybody agreed that the amendments being proposed which principally is to make provisions for the commission to deploy an online electronic in the management of the provisions of the PIA regarding the setup of hosts community trust funds was well received.

“All the discussions are around how to make the implementation of the new tool being introduced very effective. So, the issue with the hostcomply, to be introduced by the regulator is well received by all the major stakeholders. So the conversations we’re having around making sure that we put the proper provisions in place in the regulation to ensure that tool works effectively.

“A number of proposals are being made that hopefully at the end of these discussions today, all the stakeholders will be able to align on the best way to manage that to implement it.

“Essentially what we’re doing is to set up a framework to make the implementation a lot more easier. That’s basically what we’re doing, to clarify some of the issues and set out procedures that everybody will align with in operating the new law”, he said.

Chikwendu explained that “the Commission identified about 26 regulations in the first instance that we consider as priority regulations, and of those regulations, the commission has developed about 24 of them, and 14 of them are already enforced. If we conclude this process today, we will have 20 that will immediately be sent to the office of the attorney general of the Federation for approval for us to issue while we are concluding work on three more. We’re almost done with the initial body of regulations that we identified that needs to be in place in order for us to really have effective implementation of the PIA”, he said.