Nigerian Upstream Petroleum Regulatory Commission Urges Industry Operators to Remit Annual Contributions to Host Communities Development Trust Fund

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has called upon operators in the oil and gas industry to promptly remit their 3% annual contributions to the host communities development trust fund. This appeal comes in response to concerns raised by various host communities in the Niger Delta region regarding the delay in remittances by industry settlers and operators.

Under Section 235 of the Petroleum Industry Act (PIA) 2021, the statutory provision clearly outlines the obligation of operators to contribute annually to the host communities development trust fund. Failure to comply with this provision may have dire consequences, including the revocation of operating licenses.

The NUPRC acknowledges and shares the sentiments expressed by the host communities, especially considering the introduction of the new Host Community Development Trust Fund, which has replaced the Global Memorandum of Understanding (GMOU) and the Memorandum of Understanding (MOU) provisions implemented in the past.

The Commission highlights the potential implications of not addressing this issue promptly. The agitation by host communities may negatively impact efforts to attract foreign direct investment (FDI), stabilize the Nigerian currency, and enhance the nation's macroeconomic status. Furthermore, the disruption caused by the continued agitation could hamper the country's oil and gas output.

Section 240 (2) of the PIA 2021 clearly outlines the obligation of each settlor, through the operator, to contribute 3% of their actual annual operating expenditure from the previous financial year to the applicable host communities development trust fund.

The Commission has already taken steps to enforce compliance with the PIA. The Host Community Regulation was passed, and a mass sensitization program was conducted to emphasize the responsibilities of settlors in host communities. Regrettably, some industry settlers have neglected their obligations, leading to avoidable agitations.

The NUPRC expects industry settlers to fulfill their obligations promptly and begin remitting their outstanding contributions to the host communities development trust fund. The failure to do so not only hampers the intended benefits for the host communities but also jeopardizes smooth upstream operations in these areas.

While the revocation of assets is the ultimate regulatory sanction provided for in Section 238 of the PIA, the Commission recognizes the need for balance. It aims to avoid further impacting investment and production levels, as well as the revenue generated for the Federation. However, if defaults persist beyond September 2023, the Commission will have no option but to exercise its regulatory powers and revoke the licenses of defaulting settlers and operators.

The NUPRC urges all industry operators to take this matter seriously and fulfill their obligations under the PIA. Compliance with the host communities development trust fund requirement will help foster a sense of social inclusion and ensure the sustainability of operations in the Niger Delta region.

Source of content: OOO News 2023-09-01 News

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