…As NUPRC vows to sanction erring companies
Oil companies have refused to abide by the provisions of the Host Community Regulation and Petroleum Industry Act threaten Nigeria’s oil production output, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said.
The PIA mandates oil and gas companies to make an annual contribution to the applicable host communities development trust fund of an amount equal to three percent of its actual annual operating expenditure of the preceding financial year.
However, the NUPRC has revealed that many companies have failed to abide by the provisions.
The Commission stated that agitations have commenced by host communities in the oil and gas producing areas of the Niger Delta region over the delay by industry settlors/operators in remitting the statutory fees governed by Section 235 of the Petroleum Industry Act, PIA, 2021.
The Commission noted that failure to implement the provision was a major threat to Nigeria’s aspiration to increase oil production level which has been hampered by oil theft and pipeline vandalism.
The Commission in a statement at the weekend also gave oil and gas companies till the end of September to implement the provision which replaced suspended the Global Memorandum of Understanding (GMOU) and the Memorandum of Understanding (MOU) with a new Host Community Development Trust Fund.
“The Commission is fully aware of the implications of this development if allowed to fester. The agitation might frustrate the Commission’s efforts at up-scaling the drive for higher foreign exchange and attracting Foreign Direct Investment (FDI) into the country. Incidentally and quite unfortunately, it is also capable of truncating efforts at stabilising the value of the Naira and attaining the much-desired rebound in our national economy and improving our macro-economic status,” it added.
NUPRC stated that “given the implications of allowing continued default on sustained peaceful operations and the eventual effect on national oil and gas output, the Commission will be minded to activate its regulatory powers, in line with the provisions of the Act as stated above, to bring defaulting and recalcitrant settlors into compliance.
“Recently, the Commission passed the Host Community Regulation and organised a mass sensitization programme, emphasising the responsibility of settlors in host communities under the PIA, 2021. Unfortunately, this has been neglected by those concerned, thereby stoking avoidable tensions.”