…Fund To Be Financed By 2.5% Of Petroleum Operations
The Federal Government would be setting up a Host Community Development Trust Fund if the provision made for that purpose in the Petroluem Industry Bill 2020 is approved by the National Assembly.
Details of the how the fund would be set up and the framework for its management are contained in the PIB 2020, exclusively obtained on Friday by THE WHISTLER.
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This Newspaper had exclusively reported on Thursday that the Attorney-General of the Federation and Minister of Justice Abubakar Malami (SAN) had transmitted the Petroluem Industry Bill to President Muhammadu Buhari.
The need to pass the bill into law had become imperative as low oil prices and a shift towards renewable energy have made competition tougher to attract investment from oil majors.
The PIB which is currently before the President stated that the Host Communities Development Trust that would manage the fund must be incorporated within 12 months from the effective date for existing oil mining leases; and existing designated facilities among others.
In terms of how the Trust Fund would be financed, the PIB made provision that holders of Licences or Leases will contribute 2.5 per cent of the operating expenditures of the previous year pursuant to Section 270 in respect of all petroleum operations affecting the Host Communities.
The Government has significant development programs in the Niger Delta through the Niger Delta Development Commission and other programs.
However, often times, the local population does not feel part of these programs and the benefit of these programs does not always effectively impact the communities that should be reached.
The objectives of Part C of the Bill is aimed at establishing a comprehensive framework for ensuring that Host Communities in the area of operation of petroleum activities will benefit.
The fund is expected to be used for the implementation of the host community development plans which are bases of the host communities needs assessment.
Active participation by members of the Host Communities in the various organizational setups will ensure that the monies will be dedicated in a manner that conforms to the host community aspirations.
The PIB stated that failure by any holder of a licence or lease governed by the Bill to comply with its obligations may result to revocation of the applicable licence or lease.
The bill stated further that the fund would be used to finance and execute projects for the benefit and sustainable development of the host communities;
undertake infrastructural 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.
The fund is also expected to be used to advance and propagate educational development for the benefit of members of the host communities; support healthcare development for the host communities; and
support local initiatives within the host communities which seek to enhance protection of the environment
Also, the fund is being planned to support local initiatives within the host communities which seek to enhance security; and for any other developmental purpose deemed beneficial to the host communities as may be determined by the Board of Trustees.
It stated, “Notwithstanding the provisions of this Act relating to funding of the Trust Fund, nothing shall preclude the Host Communities from their entitlements under any other law.
“The constitution of each Host Community Development Trust shall establish a fund comprising of one or more accounts (“host community development trust fund”) to be funded pursuant to this section.
“Each settlor, where applicable through the operator, holder shall make an annual contribution to the applicable host community development trust fund of an amount equal to 2.5 per cent of its actual operating expenditure in the immediately preceding calendar year in respect of all petroleum operations affecting the host communities for which the applicable host community development trust was established.
“Each Host Community Development Trust may receive donations, gifts, grants or honoraria that are provided to such host community development trust for the attainment of its objectives.
“Profits and interest accruing to the reserve fund of a host community development trust shall also be contributed to the applicable host community development trust fund.”
The Bill stated that the Board of Trustees will in each year and pursuant to section 240 253 of the Act allocate from the Host Communities Development Trust Fund, about 75 per cent to the capital fund.
Out of this allocation, it said that the Board of Trustees would make disbursements for projects in each of the host community as may be determined by the management committee in furtherance of the objectives set out in section 234 247 of the Act.