Host community equity share: Ijaw National Congress threatens legal action

THE President of Ijaw National Youth Congress Benjamin Okaba said the socio-cultural group would take legal action on the three per cent host community equity share in the Petroleum Industry Act (PIA).

Okaba said that the three per cent share, which he described as paltry, was an indication that the Federal Government did not have much regard for the region on critical issues.

“We made our position categorically clear at the National Assembly and told them that because of the degradation that the people have suffered over the years, a paltry three per cent is not a starting point at all,” he said on Arise Television on Wednesday.

He noted that the $500 million being bandied around as the accrual from the  three per cent equity share  appeared large, but when  placed alongside host communities, the amount would be infinitesimal and would not go anywhere to assuage the plights of the Niger Delta people.

Meanwhile, Nigeria’s Minister of State for Petroleum resources Timorese  Sylva had earlier clarified that giving more than three per cent to the host communities would scare away investors, adding that the National Assembly and other stakeholders settled for that to attract investments.

“Everything, as weighed before three per cent, was settled on. It is in our collective interest. If we put the fund at 10 per cent, the oil companies will only add it to their operational cost and that consequence would come back to the country.”

He also pointed out that of the $50 billion dollar oil and gas investments that came to Africa last year, only $3 billion came to Nigeria because foreign investors weren’t so sure of the investment climate.

But some industry experts have said the president’s signing of the PIA would usher in a new investment era for Nigeria’s oil and gas sector.

A Professor of Energy Economics at the University of Ibadan Adeola Adenikinju told The ICIR that the signing of the PIA was a good omen for Nigeria’s oil and gas industry.

“The end of this journey comes with lots of relief for a country like ours. We have been operating with an old Petroleum Act of 1959 despite several changes in the sector over the years. The president constituting an implementation committee is good and we expect them to get to work,” he noted.

Also, former Chairman and Chief Executive Officer of the Nigerian Electricity Regulatory Commission (NERC) Sam Amadi has said that President Muhammadu Buhari signed the Petroleum Industry Bill (PIB) into law because it met his strategic considerations for the oil and gas sector.

Amadi, in a Facebook post, explained that the bill was a much-improved outcome for the sector.

He explained that the major winners were the oil majors and the government, while the seeming losers in the short term and in terms of bargain might be the communities.

“President Buhari signs the PIB. It is now Petroleum Industry Law or Act. While facilitating a retreat for the board of the NIEITI, I assured that the president will sign it in spite of the political pushback by South-South leaders on account of the failure to upgrade the Host Community Development Trust Fund from three to five per cent. The president will sign because the bill meets his own strategic considerations for the sector.

“The bill is a much-improved outcome for the sector. The major winners are the oil majors and the government. The seeming losers in the short term and in terms of bargaining may be the communities,” Amadi said.

Amadi, however, said that a few things needed to be straightened by regulation and policy to mitigate the risks in the Frontier Exploration Fund, which could become both a disincentive to move out of the petrol-dollar state and also a corruption enabler, if not managed well.

“We need an executive order indicating that although by law 30 per cent of NNPC Ltd’s profit is dedicated to FEF, it will not be used unless actioned by clear legislative approval of the budget and work plan. This sort of administrative and legislative bottleneck does not amount to an amendment of the law, but increases the costs of reckless expenditure and continuing incentives to commit to oil and gas to the detriment of non-oil economy,” Amadi further said.

Amadi explained that another area of concern was the mainstreaming of ministerial power in regulatory matters.



    This, he stated, could undermine regulatory certainty and independence which were the main enablers of a deregulated, market-led oil and gas sector.

    “We need a more robust business rule and regulatory design to get over these risks.

    “Furthermore, although we did not get five per cent for the oil communities, the structure of the HCDF is such that we could actually see a better infrastructural development with the market-based approach in this new law. It depends on the grand design and tactical approach in implementing the new law.

    “Nevertheless, I think it is a good development that the PIB was signed into law by the President,” Amadi added.


    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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