Since the Petroleum Industry Bill (PIB) was passed on July 1, by both chambers of the National Assembly, the host community provision has stirred controversy and drowning out the threat of energy transition.
In the bill, the House of Representatives provided for 5 percent of prior year’s total operating expenditure while the Senate provided for 3 percent of the same cost for a trust fund that will benefit host communities.
Now, both chambers are reconciling this aspect among others before the bill is sent to the president for assent, which some lawmakers believe could come as early as next week.
However, many groups in the Nigeria Delta have rejected this proposed allocation as too small and the classification of host communities as ignoring impacted communities.
For example, Ijaw youths, under the aegis of Ijaw Youth Council (IYC), have described the allocation of three and five percents, respectively, as an equity stake in the Host Community Trust Fund by lawmakers as “rape of justice for Niger Delta oil host communities”.
Governor Douye Diri of Bayelsa State took issue with the definition of a host community in the just-passed PIB calling it “a time bomb if not properly addressed,” in a television interview last Tuesday.
“It is an unthinkable and total injustice to allot 3 percent to oil-producing communities. We stated our position of 10 percent.
“The definition of host communities or oil-producing communities is also worrisome. Oil-producing communities should not be where pipelines are laid. If the issue of what an oil-producing community is not addressed, it is a time bomb that could explode,” the governor said.
Various other groups including non-profits and religious organisations have also found something to gripe about in the bill, but these disagreements miss the point that the world is moving away from fossil fuels and time is running out to make money from oil.
Countries in Europe, Asia as well as major oil companies are betting on green energy as concerns about climate change steer the world away from fossil fuels.
Over a dozen countries including Sweden, Costa Rica, Nicaragua, Scotland, Uruguay, Germany, Denmark, China, Kenya, Morocco, and USA are powering towards a low-carbon future by embracing solar, wind and geothermal energies.
For example, Sweden has an ambitious goal to eliminate fossil fuels from electricity generation by 2040 and Costa Rica, which already produces 95 percent of its electricity from renewables, aims to be entirely carbon-neutral by 2021.
Energy giant BP earlier in the year said it would cut its fossil fuel production by 40 percent by 2030 while its refining output would decline about 30 percent.
Earlier this year, Shell published its Energy Transition Strategy, which outlines the group’s plans to reach net-zero emissions by 2050.
It aims to reduce net carbon emissions by between 6 percent and 8 percent by 2023 when compared with 2016 levels. The target jumps up to 20 percent by 2030, 45 percent by 2035, and 100 percent by 2050.
Some of the world’s major funds are divesting from fossil fuels. Recently, the New York State’s pension fund, one of the world’s largest and most influential investors with $226billion in assets, said it would drop many of its fossil fuel stocks in the next five years and sell its shares in other companies that contribute to global warming by 2040.
Nigeria should be more concerned because the global energy transition presents an existential threat.
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Analysts say Nigeria, in comparison with other producers, is not making enough investments or quickly creating and implementing the kind of policy that will secure a future without oil.
Its oil peers are drawing up clear strategies to engage a world where fossil fuels would struggle to remain profitable.
Saudi Arabia is investing $30 billion in the renewable energy sector by 2025 in order to diversify the energy mix.
The United Arab Emirates (UAE), a geographically small state that holds some of the world’s largest oil reserves, is investing heavily in renewable energy and hopes to diversify its power generation mixture, primarily towards renewable sources, by 2050.
Industry operators are calling on various interest groups to sheath their swords so that the PIB can be passed after which its imperfections be addressed.
“It may not be perfect, but it is a big win because you solve one major problem, which is the uncertainty of the fiscal regime that has kept away investors,” Eberechukwu Orji, the CEO of ND Western, an indigenous oil company, says.
The non-passage of the PIB has turned away investors for the past 20 years who consider the fiscal and regulatory uncertainty as too big a risk to consider investing in the country.