PIA: Host Communities Demand Increase Of 3% Funding Allocation

Host communities in Nigeria’s oil-producing regions have called for an upward review of the three per cent statutory funding allocated to them under the Petroleum Industry Act (PIA) 2021.

The Host Communities of Nigeria Producing Oil and Gas (HOSTCOM) argue that the current allocation is insufficient to address the needs and development of their communities.

The PIA mandates oil companies to contribute three per cent of their operating expenses to the Host Community Development Trust, which is responsible for funding projects and initiatives in the host communities. However, HOSTCOM believes this percentage should be increased to ensure equitable distribution of resources and sustainable development in the region.

President of HOSTCOM, Benjamin Tamaramiebi, made the call on Tuesday in Abuja while briefing newsmen. He said the existing three percent had become insufficient due to the prevalent economic realities.

Tamaramiebi also appealed to the oil companies that had not complied with the HOSTCOM regulations to do so immediately to incorporate the Host Communities Development Trust Fund (HCDT) for maximal use.

“While we commend the implementation of the PIA 2021 that has started in some areas, there are many things and many communities that have to be taken care of.

“The above applies to the three per cent accruing to host communities. There is a need for the immediate upward review of the three per cent which is now very insignificant due to the prevalent economic realities.

“We give kudos to the Nigeria Upstream Petroleum Regulation Commission (NUPRC) for prioritising first the HOSTCOM regulations and today we are seeing the improvement in our production,’’ he said.

According to him, the three per cent provision given in 2021 was no longer dependable, adding that they will engage the leadership of both chambers of the National Assembly and members to push for amendments to the PIA to address contentious areas and clauses.

While listing sections for amendment, he included section 257, sub-section two, which stated that “if there is vandalism or sabotage, the community will forfeit the actual cost of repair among those to be amended.

The Nigerian National Petroleum Corporation (NNPC) group chief executive officer, Mele Kyari, had said the three percent allocation could be more than the 30 percent profit share for oil exploration in the ‘frontier basins’.

He had stated that the three per cent operating cost, which amounts to approximately $500 million annually, is higher than the budget of the Niger Delta Development Commission (NDDC).

Despite these assurances, host communities remain unsatisfied and threaten to shut down oil production if their demands are unmet.

They argue that the three per cent allocation is insufficient to address the environmental degradation, infrastructure deficits, and socio-economic challenges their communities face due to decades of oil exploration.

The PIA was signed into law in 2021. It aims to regulate all aspects of the oil sector and promote the exploration of frontier basins in Nigeria.

However, the allocation of 30 per cent of profits to frontier basins has been a source of contention, with some groups arguing that it is a way of syphoning oil money from Southern Nigeria to the North.

As the implementation of the PIA continues, it remains to be seen whether the host communities will be successful in demanding an increase in the three per cent funding allocation.