How Petroleum Industry Act Affects Oil Communities – Don
A university teacher, Dr Hilary Owamah, has shed light on the key provisions of the new Petroleum Industry Act (PIA) passed into law in August, 2021 by President Muhammadu Buhari.
The Associate Professor of Civil & Environmental Engineering spoke at a one-day sensitization workshop organized by the Delta State Ministry of Oil and Gas, at the Prof. Chike Edozien Secretariat on August 9, 2022.
Speaking on the theme “The PIA – How Best can the Host Community Manage it for Maximum Benefit?” Owamah, who is currently the Director of Academic Planning at the Delta State University, Abraka and a Fellow of the Nigerian Society of Engineers, said that the aim of the PIA was to create an environment more conducive for growth of the oil and gas sector and to address the legitimate grievances of communities most impacted by extractive industries. He noted that the relationship between host communities (HC) and oil companies, over the years, has not been cordial.
Owamah did inform the participants, which comprised mainly representatives of oil companies and their host communities in Delta State that the hostilities may have contributed to the massive theft of crude oil, vandalization of pipelines and the incessant shutdown of major oil fields.
According to the guest speaker, “the problem could have been the reason the Nigerian government is unable to meet its OPEC crude oil production quota of about 1.8 million barrels per day in recent times”.
Dr Owamah highlighted some of the earlier initiatives undertaken by government to address the issue such as the setting up of the Derivation Fund – funded with 13% of oil revenue from the Federation Account and paid to oil-producing states, creation of the Niger Delta Development Commission (NDDC) in 2000–funded with NDDC Levy of 3% of total annual budget of oil-producing companies, creation of the Ministry of Niger Delta Affairs in 2008, with the total budget allocation of about N584.6 billion between 2008 and 2022 and the Amnesty Programme to Niger Delta Militants in 2009.
He noted that it was the inability of these initiatives to address the frosty relationship between host communities and petroleum companies that led to the promulgation of the Petroleum Industry Act (PIA) which has now introduced the requirement for specified petroleum industry operators to establish a Host Communities Development Trust Fund (HCDTF).
Owamah noted that the PIA overhauls the regulation and governance of the oil and gas industry by providing for two regulatory agencies, which are the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, (NMDPRA) responsible for the regulation of their respective sectors in the petroleum operations, and can sue and be sued in their own name.
On the key provisions of the PIA, Owamah said that regrettably, the PIA provides that 30% of the profits of the NNPC Ltd will be used to finance exploration in other basins in the country, called the “Frontier Exploration Fund”.
Another provision of the PIA which aims to address the frosty relationship between oil companies and host communities is the creation of the Host Community Development Trust Fund (HCDTF), whose purpose will be to foster sustainable prosperity, provide direct social and economic benefits from petroleum to host communities, and enhance peaceful and harmonious coexistence between licensees or lessees and host communities.
According to Owamah, the HCDTF is a fund to be set up for the benefit of communities situated in or appurtenant to the area of operation of petroleum companies or operators to cater to the infrastructural development and economic empowerment of host communities.
The guest speaker also clearly stated that in incorporating the HCDTF, the operator would consult with the host communities to appoint a board of trustees and apply to the Corporate Affairs Commission (CAC) for registration of the HCDT.
In his words, “the management of the HCDTF is the responsibility of the board of trustees, management committee, and the advisory committee”
Owamah told the settlors and HC representatives present that while the operations of the HCDTF would be governed by the provisions of the PIA, the Companies and Allied Matters Act, regulations issued by the regulators and the constitution of the HCDTF, the operator is required to oversee the activities of the board of trustees and committees of the HCDTF, the funds and expenditures of the HCDTF.
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Owamah made the audience to know that for upstream operations, the HCDTF is to be funded with 3% of the operator’s annual operating expenditure of the preceding year. He also mentioned other sources of fund for the HCDTF as donations, grants or honoraria, and any profit and interest accruing on reserve funds of the HCDT.
“Funds made available to the HCDT are to be used exclusively for the development of the host communities in accordance with the Host Community Development Plan (HCDP) prepared by the operator and approved by the NUPRC (the Commission) or the Authority as the case may be”.
Owamah said that in preparing the HCDP, the operator is required to conduct needs assessments in the host communities and determine the effect of the petroleum operations, the strategy to be adopted and the projects to undertake to meet the communities’ needs.
According to Owamah, the HCDT funds are to be utilised as follows: 75% to be allocated to execution of projects, 20% to be reserved for investment, and no more than 5% is to be allocated for the administrative cost of running the HCDT.
Funds spent on projects are to be accounted for by the operator and the board of trustees of the HCDT. The don further elucidated that the PIA provides that where there is sabotage or vandalism to petroleum installations or designated facilities within a host community, that community shall forfeit, to the extent of the cost of the repairs, its entitlement under the HCDTF as such creates a sense of responsibility for the safety of petroleum installation and facilities within host communities. The provisions for environmental degradation fund and others were also mentioned by the guest speaker. The event was chaired by the Honourable Commissioner of the Delta State Ministry of Oil and Gas, Prince Emmanuel Amgbaduba with the Permanent Secretary of the Ministry, Mrs Gladys Aghogho Puegeren in attendance.
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BREAKING: PDP Suspends Anyim, Fayose
Former governor of Ekiti State, Ayodele Fayose; former president of the Senate, Pius Anyim; Prof Dennis Ityavyar and Aslam Aliyu were on Thursday suspended from the Peoples’ Democratic Party (PDP).
The PDP made the suspension on Thursday after an extensive review of the affairs of the party, pursuant to the provisions of the PDP Constitution (as amended in 2017).
The PDP also referred the Governor of Benue State, Samuel Ortom, to the National Disciplinary Committee over his reported involvement in anti-party activities.
This was disclosed in a statement signed by the National Publicity Secretary, Debo Ologunagba.
“The PDP urges all leaders, critical stakeholders and teeming members of our party across the country to remain united and focused at this critical time,” the statement added.
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A United Kingdom court has found former Deputy Senate President, Senator Ike Ekweremadu, 60, his wife Beatrice, 56, and Dr Obinna Obeta, 50, guilty of an organ-trafficking plot, which saw them bring a 21-year-old man to the UK
They were convicted of conspiring to exploit the man from Lagos for his kidney, reports the BBC.
Prosecutors told the Old Bailey the organ was to be removed and given to the couple’s daughter, Sonia, aged 25.
She was cleared of the same charge.
The victim, a street trader from Lagos, was brought to the UK last year to provide a kidney in an £80,000 private transplant at the Royal Free Hospital in London.
They were later arrested at the airport while trying to leave the UK.
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Worried about the continued scarcity of naira, the Nigeria Labour Congress (NLC) has officially declared a nationwide . The national president of the union, Joe Ajaero, gave the directive during a media briefing in Abuja.
Ajaero also directed that affiliate unions constituting the NLC should be on standby for picketing exercises across all branches of the Central Bank of Nigeria nationwide.
The NLC earlier issued a seven-day ultimatum to the Federal Government to end the petrol and cash scarcity being experienced in the country.
Ajaero told journalists on Wednesday that the industrial action became the last resort of the NLC following the expiration of the ultimatum.
He said the decision to picket the CBN branches became necessary as the federal government and the CBN had failed to show any commitment to addressing the situation.
Ajaero lamented that despite the Supreme Court order that the old N200, N500 and N1000 notes remain legal tender until December 31, 2023, the situation kept getting worse.
He said workers could not access cash to pay fares to work.
He also criticised the pricing irregularities in the petroleum sector.
“Last week, we gave an ultimatum for the review of the cash crunch bedevilling the country, but we have discovered to our dismay that as at this moment not much effort has been made to ameliorate the situation. Government is still foot-dragging on these issues we raised,” Ajaero said.
“Based on this, we met again this morning to review our position and resolved that by Wednesday next week all CBN branches will be picketed. Workers are directed to stay at home too because people cannot eat, workers can no longer go to the office, we have been pushed to the wall.
“We have decided to take our destiny in our hands, we have mobilised our workers on this exercise.”
The NLC has no fewer than 43 affiliate unions which include, but not limited to, the Academic Staff Union of Universities, the Nigeria Union of Pensioners, and the National Union of Road Transport Workers.
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