Defaulters in 3% host community trust fund risk losing operating licence – NUPRC

THE Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has warned licensed oil and gas industry operators that they risk losing their licence if they fail to remit a three per cent annual contribution to host communities development trust fund.

The warning followed delays in such remittance by some oil firms despite the Petroleum Industry Act (PIA) making the payment compulsory.

In a statement issued on Saturday, September 2, NUPRC said the delay in remittance could trigger an uprising from host communities, which would negatively affect investments in the oil sector.

“The attention of the management of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has been drawn to the agitation 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.

“Clearly, the Commission understands and shares in the sentiments and particularly the patience of the host communities on this issue, especially as the PIA had suspended the Global Memorandum of Understanding (GMOU) and the Memorandum of Understanding (MOU), replacing both provisions with a new Host Community Development Trust Fund,” the regulator said.

The regulator also expressed concerns that such delays could truncate efforts at stabilizing the value of the naira, attaining the much-desired rebound in the national economy and improving the nation’s macro-economic status.



    “The statutory provision of the PIA regarding the annual contribution of operators in the industry, under Section 240 (2) of the PIA, 2021, is very clear, and it states 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 three per cent of its actual annual operating expenditure of the preceding financial year in the upstream petroleum operations affecting the host communities for which the applicable host communities development trust fund was established”.

    “It must be 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, “it said.

    Findings revealed that prompt payment of host community trust fund is key to stabilising Nigeria’s oil market and halting oil theft as Nigeria lost over N16 trillion to oil theft in 12 years.

    Records from the Nigerian Extractive Industries Transparency Initiative (NEITI) latest policy brief noted that the volume of crude oil stolen represented a loss of over 140 thousand barrels per day, adding that between 2009 and 2018, the country lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion.

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    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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