Communities threaten to shutdown oil production over 3% pia fund
Already facing oil theft and vandalism, Nigeria has been unable to increase its oil production to meet the Organisation of Petroleum Exporting Countries (OPEC) quota or the production benchmark in the 2023 budget. The development has escalated foreign exchange crisis and pushed the country towards perpetual borrowing.
The communities criticised NUPRC’s intention, which was outlined in a letter dated October 9, 2023, and signed by Capt. John R. Tonlagha for the Commission’s Chief Executive.
The commission, in the letter, proposed participation in various activities related to the host community fund such as BOT nominations, selection and inauguration, Management Committee Advisory Committee nomination and selection, and facilitation of NEEDs assessment.
However, the community leaders argued that this would be too much for the three per cent to fund.
The group maintained that while NUPRC’s oversight function is essential, over-involvement in the activities of the HCDTs is counterproductive and financially burdensome.
“They are getting into the operations arena, and this will not augur well for the industry because each participation by the NUPRC will be funded from the HCDT trust,” the statement said.
They also criticised the mandate for HCDTs to hire lawyers and accountants with a minimum of 10 years’ experience, stating that it would be impossible to pay such professionals from the five per cent administrative fund, which comes from the three per cent.
In reality, no NGO, including those like Accord or the Nigerian Conservation Foundation, which is one of the most successful NGOs in Nigeria, employ full-time lawyers, let alone one with 10 years experience. The HCDTs are styled as NGOs and should be expected to act according to the best practices and standards of that sector,” they argued.
The community leaders stated that the NUPRC must reverse any action and regulations adversely affecting the host community to avoid a severe backlash.
They noted that host communities were often excluded from the decision-making process, which results in the use of public resources to defend decisions in newspapers.
The leaders insisted that NUPRC must stop overstepping its boundaries, avoid acting as operators and cease deducting expenses from the three per cent in cunning ways.
They noted that they support transparency and accountability, but the HostComply portal being developed by NUPRC to manage the administration of the fund should not be funded from the three per cent, as per Sele-Epri.
According to them, the regulator should bear the financial burden for the application, which enables it to monitor activities of different players more effectively.
They accused the regulator of insensitivity to the host communities’ concerns, particularly the allocation in the PIA and the criminalisation of oil and gas asset destruction against communities lacking surveillance contracts.
They also questioned the timing of NUPRC’s review of host community regulations, suggesting that the focus should be on setting up HCDTs and prioritising benefits to the community.
The communities said they would be forced to shut down oil facilities within the state if the regulator fails to refrain from actions that could potentially reduce or create bottlenecks for the three per cent host community fund.
They declared their readiness to take decisive actions and escalate their efforts to address the concerns of the oil and gas communities if the NUPRC fails to treat the matter as an emergency.
They warned that improper handling of host community issues could have negative repercussions on Nigeria’s oil production and economy.
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