3% operating cost to be managed, controlled by host communities — Kyari
By Uthman Salami
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, has explained that the three per cent profit from operating cost of oil companies in Nigeria, earmarked by the newly signed Petroleum Industry Act (PIA) for host communities would be managed and controlled by the communities themselves.
Kyari, further added that the three per cent profit for host communities, in actual value, was more than the 30% profit share for oil exploration in the ‘frontier basins.’
According to Kyari, 30% profit share for oil exploration in the ‘frontier basins’ is about $400 million per annum but the 3% operating cost to accrue to host communities is about $500 million annually.
This clarification was made by the NNPC boss while featuring on NTA’s , ‘Good Morning Nigeria’, a daily programme monitored by Nigerian NewsDirect.
According to him, “The resources are coming from the host communities, it should go back to benefit them.”
The President, Major General Muhammadu Buhari (retd.), had signed the Petroleum Industry Bill 2021 into law early last week, putting to end 13 years of legislative stalemate of the bill.
Currently, Federal government is exploring oil from eight states, which are tagged as the Niger Delta region, including; Abia, Akwa Ibom, Bayelsa, Delta, Edo, Imo, Ondo and Rivers States.
Meanwhile, NewsDirect had earlier reported that controversies continue to trail the PIA as many in the Niger Delta region felt they had been armtwisted by lawmakers, thereby hauling criticism at the president for assenting to the PIB without the amendment of some controversial sections, claiming that it was yet another move to favor the Northern region over South.
However, the NNPC GMD blamed the grievances of some people in the Niger Delta for misconstruing what constitutes 3% operating expense and what constitutes 30% profit share.
According to Kyari, “When you say 30 per cent profit of oil and gas from NNPC shares or from PSC, it is a very small number. The percentages appear very outrageous but 30 per cent of what? Nobody has sat down to look at it. When you say profit oil 30 per cent, it probably comes down to less than $400 million per annum.
“But when you come to the host communities, you have three per cent of our operating expense. We spent about $16 billion in fiscal 2020 in our operating expense across the industry. So when you take three per cent of that number it comes above $500 million far above the budget of NDDC.
“You can see that those percentages don’t reflect the realities that we are trying to achieve by this. And for profit oil, there are lots of uncertainties around it because if you don’t make profit it is zero but you must spend money to do operating expense.
“We are very sure that provisions that are meant for host communities will be implemented and delivered.”
