A Review of the Nigerian Energy Industry

PENGASSAN, NUPENG want NASS to channel NDDC funds to PHICF

*A section of the BP Eastern Trough Area Project (ETAP) oil platform is seen in the North Sea, around 100 miles east of Aberdeen in Scotland, Britain.

Mkpoikana Udoma

18 May 2018, Sweetcrude, Port Harcourt —
The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN and its sister union, the Nigerian Union of Petroleum and Natural Gas Workers, NUPENG, have faulted the 2.5percent operating cost imposed in the Petroleum Host and Impacted Communities Bill, PHICB, to be remitted by oil firms to fund host communities.

Chairman, PENGASSAN and NUPENG Joint Committee on PIB, Mr. Chika Onuegbu, said PHICB imposes additional financial burden on oil firms, whereas oil companies were already paying their taxes, fees and royalties to the Niger Delta Development Commission, NDDC, Education Tax and for Nigerian Content Development.

He said the position of NUPENG and PENGASSAN on PHICB is that the National Assembly and the Federal Government should repeal the NDDC Act, disband the Commission and channel NDDC funds directly to fund the Petroleum Host and Impacted Communities Fund, PHICF.

Onuegbu who said Nigerians should accept the reality that NDDC has been a massive failure, added that the even 2.5percent operating budget proposed in the Bill is inadequate, saying that inadequate provision of funds may dash the hopes of the petroleum host and impacted communities and further breach the trust between the host communities and the government.

He stressed that oil workers will support every effort of the National Assembly genuinely aimed at addressing the challenges of host communities, including the Petroleum Host and impacted communities Bill 2018.

“Our interactions with the Oil and gas companies raise concerns that the Bill imposes additional financial burden on the Oil and gas companies who are already paying their taxes, fees and royalties, 3% budget to Niger Delta Development Commission (NDDC), 2percent Education Tax and 1percent NCD.

“Our further reflections on the need for the Petroleum Host Community Fund indicate that the massive failure of the NDDC is a major driver for the need for this fund.

“It is therefore our considered opinion that the National Assembly and the Federal Government should accept the reality that NDDC has been a massive failure, Repeal the NDDC Act and disband the NDDC, and channel the NDDC funds directly to fund the Petroleum Host and Impacted Communities Fund. This is in our view will deliver better value than the NDDC.”

NUPENG and PENGASSAN also called on the National Assembly Committee on PIB to clearly defined the parameters to be used in determining which community qualifies as a Host community and which community qualifies as an impacted community in the PHICB Bill.

The oil workers union also urged the Committee to clarify the issue of who is a Licensee and Lessee of upstream, midstream or downstream assets in the section 2(1) of the bill to ensure that no licensee and lessee will hide under the provision to deny its host and impacted communities the benefits due them as provided in the bill.

“The Bill does not define which community qualifies to be a ‘Host Community and which community qualifies to be an ‘impacted community. Instead section 26 of the Bill leaves the Settlor with the responsibility and exposure of deciding that.

“We consider this a potential landmine which can cause unnecessary tension or even crises between the communities and the Settlor (Oil and gas companies).”

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