PIB: FG Ignores 10% Compensation Agitation From Host Communities, Insists On 2.5%

The Federal Government has said that there is nothing it can do on its own to adjust the 2.5 per cent proposed in the new Petroleum Industry Bill as compensation.

The Minister of State for Petroleum, Timipre Sylva and the Executive Secretary of the Petroleum Technology Development Fund, Bello Aliyu Gusau, made the position on Thursday during the briefing on the Petroleum Industry Bill in Abuja.

Based on the previous arrangement, host communities benefited from 10 per cent of the net profit of oil companies operating in the different Niger Delta communities.

The last bill considered by the 8th National Assembly reduced the 10 per cent to 5 per cent before it is further slashed to 2.5 per cent in the current bill.

But there was a recent push for the upscaling of the benefits to 20 per cent by some stakeholders in the oil rich communities.

In the draft PIB which is before the National Assembly, the PIB dropped the 10 per cent host communities benefits agitation against the back drop of the uncertainty that the operating companies may sometimes declare loss.

The National President of the host communities,  Benjamin  Style Tamaranebi, had in February said the 10 per cent earlier proposed must be worked upon if the bill is to be acceptable to the various communities bearing the brunt.

The PTDF boss, Gusau, in defense of the decision denied any conversation around 20 per cent, but decried the uncertainty surrounding deduction of host communities benefit from net profit of operating companies.  

He said, “For the last 20 years, what has been agitated for was 10 per cent of profit of operating companies. Now what happens in any way a company declares a loss? Where are you going to get the percentage from?

“So when we come to design this particular document, we asked our self the questions, there is no doubt something has to be done for the direct benefits of the host communities.

“But what do we need to do? Do we need the old issue of 10 per cent of profit and we asked our self what of the possibility if a company decides to one day to say i don’t have a profit, and in this business it is possible.

“So we said what is a permanent source of revenue that can be devoted for the direct benefits of the host communities? We considered a percentage of capital expenditure, but that is going round for one to three at most five years.”

On choosing a fair percentage of the operating expenditure for both the host communities and the companies, he said 2.5 per cent is a huge amount that would go a long way in solving infrastructural shortfalls in the host communities.

The PTDF boss said to ensure the funds are not syphoned by the managers of the funds, adequate arrangements have been made on its utilisation.

He said 75 per cent of the funds would be used for capital projects in the host communities, while 20 per cent would be transferred to the reserved funds.

Gusau said, “In order to ensure that these funds is optimally used, the law will provide that: one, 75 per cent of that fund must be used for capital expenditure in the affected communities, 20 per cent will be a reserved fund for future use and only 5 per cent of that fund can be utilised for administrative purpose.

“We don’t want a situation where by huge bureaucracy will grow around the utilisation of those funds and at the end of the day we will find it that the communities are not benefitting and it will be just those who are managing these funds that will be benefitting.

” We believe this is a better deal for the communities than all the other things that were considered in the past.”

Meanwhile, the Petroleum Minister who is a member of a host community said the FG cannot  make further adjustments to the PIB as it is been deliberated on by the NASS.

Sylva said, “What I will say is that what is before the National Assembly is a draft bill at this point, I don’t know whether government can still change the bill because it has been already submitted to the National Assembly.”