Home News PIB: 10% host communities fund generates strong debate in Senate

PIB: 10% host communities fund generates strong debate in Senate

by Business News Report

The Petroleum Industry Bill (PIB) generated strong debates in the Senate in Abuja on Monday with majority of the Northern senators demanding a review of the 10 per cent host communities development fund. The senators complained that the bill vested excessive powers on the Minister of Petroleum Resources and made the National Frontier Exploration Agency (NFEA) a mere department instead of an independent agency.

The NFEA is an agency provided for in the bill to carry out exploration for oil across the country. In a lead debate, the Senate Leader, Sen. Victor Ndoma-Egba, said the bill when passed into law would transform the legal, fiscal and proprietary regimes of the oil sector. Ndoma-Egba said that the bill being “easily one of the most revolutionary bills to be considered by the Senate’’ would harmonise and consolidate the diverse laws currently governing operations in the sector.

He said the key objectives of the PIB was to create efficient regulatory institutions that would promote transparency, accountability, safety, safe and clean environment in both the upstream and downstream sectors. “The bill has taken into consideration the many compelling issues in the petroleum sector and seeks to comprehensively capture the legal, fiscal, health, environmental and governance needs of the industry. The bill equally makes adequate provisions to ensure the effective exploitation of gas resources and the management and utilisation of downstream gas facilities and products,’’ he said.

Sen. Alkali Jajjere (ANPP- Yobe) observed that the 10 per cent provided in the bill for development of host communities was not logical and should be reviewed. He argued that the (NFEA) should be an independent agency to enable it to function effectively without being reduced to an ordinary department in the Ministry of Petroleum Resources. Jajjere said the powers given to the minister by the bill would make the office too powerful and detrimental to the transparent operations in the oil industry.

“The new PIB has a lot of issues which need to be addressed before passage. We should reduce the powers given to the minister otherwise the person will become whatever he or she wants to be to serve the interest of those in power at every point.
Sen. Ali Ndume (PDP- Borno) said that the PIB was inundated with inconsistencies with the oil and gas policy framework which had to be addressed for enhanced growth of the industry. He suggested that instead of providing 10 per cent for host communities, the communities should be given ownership rights. He urged the Senate to use the PIB as a launch pad for Nigeria’s search for alternative source of energy.

“It’s important for this bill to emphasise for establishment of a stand-alone agency (NFEA) that will cater for the exploration activities in the various areas where hydrocarbon has been found. We should introduce host communities equity fund. The communities should be given opportunity to be part owners of the exploration companies instead of waiting for the oil companies. We should be thinking of alternative source of energy. We should use PIB as a springboard for research, development and exploration of alternative source of energy,’’ he advised.

Also contributing, Sen. Ahmed Lawan (ANPP- Yobe) observed that the poor state of oil producing communities did not reflect the huge resources given to them in the last 13 years. He said in view of the enormous funding given to the oil producing areas, there was no need for the provision of host community development fund in the PIB. He pledged to always give support to any legislation that was geared to promote transparency and accountability in the oil industry as well as enhance the growth of the economy.

“The NFEA should be independent with a clearly spelt out source of funding. Within the last 13 years about N11 trillion, from various intervention sources, had been expended on the host communities without any tangible impact in the lives of the people. Derivative should be targeted at developing the people and not for building cities. Sen. Isa Galaudu (PDP- Kebbi) said the bill should be returned to the Executive for it to make it more nationalistic in outlook for the benefit of the entire country. He noted that the bill would not only discourage investments in the oil and gas sector but would institutionalise corruption in the system.

“This bill as currently structured is anti-investment. It is pro-corruption. This bill is against its provisions to provide a firm regulatory framework to guide operations. We should return this bill to the sender so that they should do more work to make it nationalistic and investor-friendly, ‘’ he said. In his contribution, Sen. Ifeanyi Okowa (PDP- Delta) explained that the 10 per cent host community fund was a corporate social responsibility to be paid by the oil companies and not sourced from the Consolidated Federation Account. He said the cost of repairing vandalised pipelines would be withdrawn from the fund of the host community where such incident occurred.

“If there is any defect it is our duty as parliament to correct those things and utilise those parts that are beneficial. The amount represents 10 per cent of the net profit of oil companies. This money is not from Federation Account. It is coming from the oil companies as corporate social responsibility. In the case of vandalism of pipelines, the money for the repairs would be taken from the 10 per cent of the host community fund,’’ he explained. Sen. Ibrahim Gobir (PDP- Sokoto) urged the lawmakers to cooperate to ensure that the deficiencies in the bill were tidied up to improve the lives of Nigerians.

“It’s an important bill because it touches on the lives of every Nigerian. So we need to look at it carefully to make it beneficial for everybody. We have to do quite a lot of work on this bill so as to improve what we are giving to Nigerians. Similarly, Sen. Bukola Saraki (PDP- Kwara) said in spite of the controversies surrounding the PIB, there was a need for the Senate to pass it to reform the oil sector in line with international best practice. “We must be seen to carry out this assignment to its logical conclusion. We should move away from issues that are controversial. We should pick issues that are not controversial and pass the bill. Let us address the key issues of lack of transparency, accountability and widespread corruption in the industry. It is our responsibility to make this bill succeed, ‘’ Saraki appealed.

The Senate Deputy President, Sen. Ike Ekweremadu, announced that debates on the PIB would continue on Wednesday and commended the senators for their patriotic contributions. Ekweremadu urged those who would speak on Wednesday to ensure that their contributions served the interest of Nigeria.

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