Reps: Penalise oil companies for defaulting on host communities

Beloved JohnOctober 17, 20232 min

The motion described the non-remittance of 3% of operating expenditures of companies as a statutory contribution to host community funds as a violation of the PIA.

The House of Representatives has asked that oil and gas companies, who have failed to remit 3 percent of their annual operating expenditure to host communities in the Niger Delta as provided for in the Petroleum Industry Act (PIA), 2021, be penalized.

It also directed the regulatory authorities – the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to revoke the license of defaulting companies.

This follows the adoption of a motion on the “Non-Remittance of Three percent (3%) Annual Operational Expenditure (OPEX) to Oil and Gas Producing Host Communities,” sponsored by Rep. Victor Obuzor (PDP, Rivers).

READ ALSO: Gas Flaring: Reps direct IOCs to pay penalties to FG coffers

In his lead debate, Obuzor noted that the goal of the PIA is to ensure the development of host communities and enhance harmonious coexistence between communities and companies.

However, he observed that since the PIA was enacted, some oil-producing companies have failed to remit the stipulated contributions to the Host Communities Development Trust Funds (HCDTFs), describing this as a blatant violation of Section 240 of the PIA.

“Oil and Gas Companies are to remit 3% of their annual operational expenditure to Oil and Gas producing host Communities via the Host Community Development Trust Fund,” Rep. Obuzor stated, adding:

“Two years after the coming into effect of the Petroleum Industry Act, Oil Producing
Companies have deliberately refused to make the necessary remittance as mandated by the PIA, thus sparking agitation within the Host Communities as they are feeling shortchanged.

“The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which is mandated to facilitate speedy implementation of the 3% OPEX has awarded a penalty of $1,825 million to the defaulting oil companies, which is to be paid at the rate of N52,500 per day as stipulated by the Petroleum Industry Act (PIA).”

In adopting the motion, the House also directed its committees on Host Communities, Petroleum Resources (Downstream), and Petroleum Resources (Midstream) to investigate the non-remittance of 3%  annual operational expenditure and report back within six weeks for further legislative action.

Beloved John

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