By Opeyemi Adelakun
The Nigerian Upstream Petroleum Regulatory Commission has registered 172 Host Communities Development Trusts established by oil and gas companies under the Petroleum Industry Act.
The development comes as the regulator intensifies enforcement of the PIA provision requiring oil and gas companies, known as settlors, to contribute three per cent of their operating expenditure in the preceding financial year to the Host Communities Development Trusts.
The NUPRC Chief Executive, Oritsemeyiwa Eyesan, disclosed this when she led the commission’s management to a meeting with the leadership of the Revenue Mobilisation Allocation and Fiscal Commission in Abuja.
The meeting focused on developments in the upstream petroleum sector and the implementation of provisions of the PIA, particularly those concerning host communities and the obligations of oil and gas companies.
According to a statement issued by the Head of Media and Corporate Communications at the NUPRC, Eniola Akinkuotu, 172 HCDTs had so far been incorporated by oil and gas companies.
Eyesan said the commission had established procedures and regulations to ensure that the trusts were properly constituted and that settlors fulfilled their financial obligations.
“We have laid out procedures for doing things, and we have put regulations in place to streamline the process. So far, we have registered 172 HCDTs, and we have been able to manage contributions by settlors,” she said.
What the 3% Contribution Means
The Petroleum Industry Act, which came into force in 2021, introduced the Host Communities Development Trust as a mechanism for giving oil-producing communities a direct stake in petroleum operations and promoting development in areas hosting oil and gas facilities.
Under the law, oil companies operating as settlors are required to establish an HCDT and make annual contributions equivalent to three per cent of their operating expenditure from the preceding financial year.
The funds are intended to finance projects and programmes aimed at improving the social and economic conditions of host communities while promoting peaceful relations between communities and petroleum operators.
Eyesan said some of the trusts had already begun funding critical infrastructure, including schools and hospitals.
She added that the projects had helped improve relations between oil-producing communities and operators, reducing tensions that had previously disrupted petroleum operations.
According to the NUPRC boss, the improved peace and stability had also contributed to increased crude oil production.
Disputes Over Trusts
Despite the progress, Eyesan acknowledged that the implementation of some HCDTs had been affected by disputes, particularly disagreements over the composition of boards of trustees.
She said the NUPRC was working to resolve the disputes and ensure that the trusts operated effectively in the interests of host communities and the country.
The regulator’s Alternative Dispute Resolution Centre, according to Eyesan, has also played an important role in addressing grievances between host communities and petroleum operators.
The development follows an earlier directive by RMAFC in August for the dissolution of a disputed Host Community Development Trust linked to Sterling Oil Exploration and Energy Production Company, following concerns about its constitution and representation of affected oil-producing communities.
Eyesan assured RMAFC that the NUPRC would continue enforcing the relevant provisions of the PIA and promised to investigate the lingering dispute involving SEEPCO and its host community in Anambra State.
RMAFC Seeks Stronger Collaboration
Speaking at the meeting, the Chairman of RMAFC, Mohammed Bello Shehu, commended the NUPRC for reforms in the upstream petroleum sector which he said had contributed to increased oil production.
Shehu said the upstream industry remained critical to RMAFC because of its significant contribution to revenues accruing to the Federation Account.
He called for stronger cooperation between both agencies to ensure that reforms in the petroleum sector translated into increased revenue and improved development outcomes for Nigerians.
The establishment of HCDTs represents one of the major changes introduced by the PIA to address longstanding conflicts and underdevelopment in oil-producing communities.
Leave a Reply