Oil firms that neglect their obligations to host communities risk losing their operating licenses if the new Petroleum Industry Bill (PIB) presently before the National Assembly sails through.
In the new bill sighted by LEADERSHIP yesterday, the power to revoke oil licenses is vested on the minister of Petroleum Resources.
According to the bill, the action will be taken with the recommendation of the Nigerian Upstream Regulatory Commission, among other powers.
It defines host community as “any community situated in or appurtenant to the Area of Operation of a Settlor (oil company), and any other community as a Settlor may determine.”
It said that any oil and gas company that fails to incorporate the Host Communities Development Trust would have its license revoked.
It stated that on its constitution, the Host Communities Development Trust would be empowered to manage and supervise the administration of the annual contribution of the settlor (oil companies) contemplated under the Act and any other sources of funding.
The bill further proposed that the objectives of the trust shall include financing and executing projects for the benefit and sustainable development of the host communities.
“It will undertake infrastructure development of the host communities within the scope of funds available to the Board of Trustees for such purposes; and facilitate economic empowerment opportunities in the host communities, among others,” it said.
Other powers granted the minister of Petroleum in the new bill include the revocation and assignment of interests in the petroleum industry, and approval of the fees for services rendered by the upstream, midstream and downstream regulatory authorities.
The bill is also proposing to empower the minister to order a cutback of the levels of crude oil or condensate production in the context of international oil pricing agreements supported by Nigeria.
It stated: “The minister is also empowered to, upon the recommendation of the Nigerian Upstream Regulatory Commission, or the Nigerian Midstream and Downstream Petroleum Regulatory Authority, direct in writing the suspension of petroleum operations in any area.
“The suspension, according to the bill will persist until arrangements to prevent danger to life or property have been made to his satisfaction or where in his opinion, a contravention of the Act or any regulation made under the Act has occurred or is likely to occur”.
The bill has passed second reading at the Senate and a committee was constituted to work on it for further deliberation.
EITI Commends NNPC On 2019 Audited Account Report
Meanwhile, the Extractive Industries Transparency Initiatives (EITI) has commended the group managing director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, for honouring his commitment to promote and deepen the culture of transparency and accountability in the Corporation.
In a letter addressed to Mr Kyari, the EITI’s executive director, Mark Robinson, said, “The NNPC has set a good example and could lead in championing transparency for other NOCs in Africa.”
Recognising NNPC’s commitment to the EITI Principles, the global body has invited Mallam Kyari to speak at its virtual workshop on the topic, “Learning from Mainstreaming Disclosure Efforts” next month.
The workshop will explore further opportunities for making the systematic disclosure of extractive data the norm.
The EITI has also welcomed NNPC’s recent transparency efforts, such as the monthly publication of its Financial and Operations Reports since 2016 as well as recent publication of the Corporation’s 2018 and 2019 Audited Financial Statements (AFS).
The, it said, efforts demonstrate the corporation’s continued commitment to openness in its business dealings.
Robinson said, “A review of the group’s Audited Financial Statement shows that NNPC has reduced its losses by 99.7 per cent from N803 billion in 2018 to N1.7 billion in 2019 which is attributable to a huge increase in profit from the operations of the subsidiaries. This is an indication of good practice and commitment to principles of transparency and accountability.”
In the letter, the EITI further affirmed its support for the NNPC in tailoring monthly financial and operations reports and financial statements in line with the EITI Standard and Expectations for EITI supporting companies.
It highlighted the opportunity for the NNPC to champion discussions on upstream contract disclosure in Nigeria.
On assumption of office in July 2019, Kyari made opening the books of the Corporation a cardinal aspect of its management under its Transparency, Accountability and Performance Excellence (TAPE) Initiative which he launched.
Source: Leadership Nigeria