PIA Will Galvanise Massive Development For Oil Producing Communities–Kyari

The Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari has said that the implementation of the host Communities Fund as captured in the Petroleum Industry Act will galvanise massive development of oil producing Communities.

He said this during an interview on ‘Good Morning Nigeria Programme’ on the Nigeria Television Authority monitored by THE WHISTLER.

The Federal Government had in the PIA created a Host Community Development Trust Fund to cushion the negative impact that oil exploration might have on oil producing Communities.

Under the arrangement, there would be a Board of Trustees that would manage the fund which must be incorporated within 12 months from the effective date of the Act for existing oil mining leases; and existing designated facilities among others.

In terms of how the Trust Fund would be financed, the PIA made provision that holders of Licences or Leases will contribute three per cent of the operating expenditures of the previous year in respect of all petroleum operations affecting the Host Communities.

But leaders of some Oil producing communities have described the three per cent Host Communities Fund as an insult on the oil rich Niger Delta region considering the environmental impact of their oil activities.

But speaking on the development, Kyari said that three per cent is huge considering the fact that it is calculated as a percentage of the operating cost of the oil companies.

He said with over $16bn cost of operations last year, the three per cent could fetch oil producing Communities about $500m which is larger than some items contained in the country’s national budget.

The NNPC GMD said that if effectively implemented, the three per cent Host Communities Fund will be more impactful than any of the intervention projects that had been implemented in the oil rich regions.

Te Government has significant development programs in the Niger Delta through the Niger Delta Development Commission and the 13 per cent derivation fund to oil producing states.

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.

Kyari said the one of objective of Act is to correct this anomalies by ensuring that the host communities take full ownership of developmental projects that would be sited in their communities.

The implication of this, according to him, is that only projects that would have direct developmental impact on the people will be implemented through the fund.

He said that 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.

He 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.

He said, “The whole concept of the Host Communities was the creation of the executive and the government decided that the PIB must have a provision in the law where the welfare of host communities is taking back to them.

“The Host Communities Fund is in control of the host communities, it is not one that will be managed by the oil companies. It is our responsibility as government to ensure that those funds are set up.

“The data along how much oil companies are spending in a year is no longer secret, the PIB has made it clear that you must disclose your spending for the purpose of taxation to the FIRS and therefore your cost of operation is no longer secret.

“Let us not forget that every attempt in the past to ensure that development comes to the host communities failed. Without any contradiction, I can tell you that the 13 per cent derivation was designed to make sure development comes to the Niger Delta region and by implication the host communities.

“Secondly, we have the NDDC to ensure that development comes to the Niger Delta region and more so by implication the host communities.

” So, this is an addition to complement what is on ground and we will make sure the existing structure deliver what it is meant to achieve. While the NDDC is doing what it should do according to its Act, the Host communities fund will drive massive development that will be driven by the communities.

“We know what the host communities go through, there are villages that are just 200 metres away from a flow station that don’t have drinking water, no hospitals, the schools are not operating and yet there are massive provisions that we have made as an industry to make this work but this wont happen. Going forward, these communities will decide what they want and it will be done because the funds are available.”