By Obas Esiedesa

Two years after the Petroleum Industry Act became operational with oil and gas companies mandated 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 in the upstream petroleum, the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, has threatened sanctions on companies which have failed to implement the provision.

With the country struggling to increase oil production level which has been hampered by oil theft and pipeline vandalism, NUPRC has noted that failure to implement the provision was a major threat to Nigeria’s aspirations.

The Commission in a statement at the weekend 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 expressed concerns over agitations 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 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 stabilizing 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 organized a mass sensitization programme, emphasizing the responsibility of settlors in host communities under the PIA, 2021. Unfortunately, this has been neglected by those concerned, thereby stoking avoidable agitations. The settlors are therefore required to perform their obligation, to commence remittance of the statutory 3% contribution.

The Commission noted that remittance of the statutory contribution which should have served as succour to the host communities has sadly become a source of pain to the lawful beneficiaries.

“This has now given impetus to actions that might affect smooth upstream operations within affected host communities; a situation that could have been addressed through routine social inclusion”, it stressed.