BusinessDay

PIB: Funding host communities still a contentious issue

When it was first introduced in December 2008 to the National Assembly, the Petroleum Industry Bill (PIB) provided a Development Trust Fund for the host communities at 10 percent oil companies’ profit to reduce agitations of neglect.

It was later reduced to 5 percent in the 2012 version of the bill and in the current revised version, it has been cut to 2.5 percent of oil companies’ operating profit.

Some in the oil-producing communities have kicked against this provision.

Benjamin Tamaranebi, national president of the Host Communities of Nigeria Producing Oil and Gas (HOSTCOM), said it would not improve the deplorable state of the region.

But Timipre Sylva, minister of State for Petroleum Resources, said the allocation is fair.

“Profit means that if I don’t declare it, you don’t get anything. I can decide to say 100 percent of profit and then I don’t declare a profit. So you don’t get anything. But in this case, it is 2.5 percent of the operating cost,” Sylva said.

“So at the end of the year we look at your operating cost and of course take 2.5 percent of that cost to the budget of the next year,” he said.

At the public hearing of the PIB in the National Assembly, disagreement among host communities led to a fight.

Some like Tamaranebi want the Niger Delta Development Commission (NDDC) scrapped for not living up to expectations and replaced with the Host Communities Development Commission (HCDC) in the new Petroleum Industry Bill (PIB) 2020.

Some also want the allocated funds distributed directly to the host communities to prevent politicians and other interest groups from stealing them.

“As host communities, we will accept nothing less than 10 percent equity share so we can have a sense of belonging and treat the critical assets as our own for the betterment of Nigeria and the oil industry,” Tamaranebi said.

The Nigerian government, following violent agitations by youths in oil-producing communities devasted by oil exploration activities, has created the Niger Delta Ministry to drive development to the region, provided a 13 percent derivation fund, and even created an Amnesty Fund to rehabilitate repentant militants. The agitations still continue.

Ken Henshaw, executive director of ‘We the People’, a Non-Governmental Organisation (NGO) representing several civil society organisations in the region, kicked against the governance structure of the development trust fund provided in the PIB where no member from the host communities could be appointed into the board of trustees and management committee.

Henshaw said it was wrong to deny the host communities their benefits because of oil sabotage, adding that the responsibility of securing oil and gas pipelines cannot be left to host communities.

Conversely, Funmi Ogbue, who made the presentation on behalf of Women in Energy Network (WIEN), said that the 2.5 percent development trust fund should be reduced to 1 percent because it was too exorbitant in view of other taxes the oil companies pay.

Analysts fear the contentions over the bill may negatively impact the outcome.

“With the fighting drama that happened among the host communities last week, do you think the National Assembly will take them seriously,” said Monday Osasah, acting executive director, African Centre for Leadership, Strategy, and Development.

Osasah said the region should present a unanimous position that speaks to solutions to the problems of the region, otherwise the legislators could pass what does not represent the larger interest.

“The key solution for me is for the region to organise themselves. The governors at some point put up the BRACED commission – a commission that represents Bayelsa, Rivers, Edo, Cross River, Edo and Delta States.

“The commission would be able to harmonise the diverse interests of the stakeholders in the region and pushed by the various chief executives of the states,” Osasah said.

Henry Adigun, team lead, Facility for Oil Sector Transformation (FOSTER), an oil sector non-profit, said the host communities need to make the best of the public hearings to help the committee with a better working document for the sector.

“Nobody is going to give them that kind of 10 percent of oil companies’ profit. Already, the Niger Delta is already getting about 36.7 percent of oil revenue when you add the NDDC, the tax, and the derivation,” said Adigun.

Joe Nwakwue, chairman, Society of Petroleum Engineers and an oil sector governance expert, agrees.

“The problem about the host community just like in several issues around the country is more like loss of sense of ownership from the Deltans on the assets,” Nwakwue said.

“I’m worried the host community fund may not address the Niger Delta issues holistically because the issue there is beyond developmental.

“Possible royalty scheme for instance has been suggested, which I think addresses to some extent concerns of ownership loss by the people,” he said.

Get real time updates directly on you device, subscribe now.