Upstream regulator hosts communities to boost oil, and gas production capacity

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) along with oil and gas host communities of the Niger Delta region are looking to boost oil and gas production by leveraging the Petroleum Industry Act (PIA) to internally curb issues around pipeline vandalism, oil theft, insecurity.

Speaking at a HostCom sensitisation workshop on the implementation of the Host communities development Trusts (HCDTs) on Tuesday, Gbenga Komolafe, Commission Chief Executive, said Nigeria has the technical capacity to produce about 2.5 million barrels of oil daily, but issues around insecurity, low investment, de-prioritisation of funding of hydrocarbon development arising from energy transition limits production capacity to around 1.5 million barrels of oil and condensate per day.

Komolafe said to the PIA 2021, in addressing some of these issues particularly theft and insecurity domesticated the protection of the country’s oil and gas infrastructure to the Host Communities with the incorporation of Host Communities Development Trust (HCDT) by the settlors (oil and gas companies) provided for in Section 235 as well appointment of Board of Trustees (BOT) by the settlor in consultation with the host communities.

“The PIA stipulates that each settlor, where applicable through the operator, shall make an annual contribution to the applicable host communities development trust fund of an amount equal to 3 percent of its actual annual operating expenses of the preceding financial year in the upstream petroleum operations affecting the host communities,” he said.

He added that the PIA required the Board of Trustees to set up a Management Committee responsible for the general administration of the Fund, and they should also institute Advisory Committee, adding that the PIA also provides an allocation formula with which the Board will annually give allocations from the fund.

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“75 percent to the capital fund to be disbursed for projects in each of the host communities; 20 percent to the reserve fund to be invested for the utilization of the host communities development trust whenever there is a cessation in the contribution payable by the settlor; and an amount not exceeding 5 percent to be utilised solely for the administrative cost of running the trust and special projects,” he said.

Komolafe said efforts have led the Commission to successfully approve 75 Host Community Development Trusts out of which 41 have been fully incorporated by the Corporate Affairs Commission (CAC).

Furthermore, 19 Fund Managers have been pre-qualified and commenced the process of establishing a baseline of ongoing community development projects, in preparation for ensuring the migration of such into the HCDTs.

He revealed that the Commission in partnership with an OEM developed an industry-intelligent, digital automated platform for reporting and monitoring the HCDT for transparent administration of the HostCom provisions of the PIA.

“The portal has been designed to meet specific requirements of HCDT as enshrined in the PIA and will aid all stakeholders (including the Settlors, Board of Trustees, Management Committees, Advisory Committees, Fund Managers etc) to fulfil their obligations to host communities and promote accountability and transparency in the management of the HCDT program as well as enable quick feedbacks from the stakeholders and the public for the Commission to carry out its regulatory oversight effectively,” he said.