SECTION 2 of the PIB 2012 : “the entire property and control of all
Petroleum, under or upon any land within Nigeria, its territorial waters, or
which forms part of its continental shelf and the Exclusive economic zone, is
vested in the Government of the Federation.”
This is the
beginning of many of Nigeria’s problems including the issue of economic
viability of the 36 states created without recourse to their sustainability.
Many see the oil wealth as national cake and would do anything including
short-changing the host communities from their rightful benefits if it will
keep their lazy politicians living in opulence.
Just yesterday I read in the news that the petroleum
host community fund (PHC Fund) in the PIB 2012 has been slashed from 10% to
7.5%. This is coming at a time when the Niger Delta is still feeling cheated
from the revenue that actually gets to the host communities. The reasons
adduced for such slash cannot be in the overriding interest of the country and
neither is it in conformity with best practices in business as opined by the
members of the House of Representatives. The Chairman of the Ad-hoc Committee
on PIB, Reps Ishaka Bawa (TARABA STATE), suggested a reduction of the
proposed percentage, asking the House to be mindful of the implication of the
levy on future investments in the Petroleum, Oil and Gas Sector. While the NNPC
and other experts are rooting for an upward review in order to reduce oil
theft, the Honorable members are busy reducing it further to a paltry 7.5%, can
you beat that?
It is also going to generate a lot of debate
as the president elect General Buhari assumes office from May 29th,
2015. These are auspicious times for Nigeria’s development efforts and it
doesn’t augur well to see there are deliberate problems included in the PIB as
passed by the NASS members. In my opinion it is another method of short
changing the host communities from benefits derived from the loss of their
livelihood. We have seen attempts at fuelling conflict within the communities
as gas flaring and other environmental degradation issues are not adequately addressed.
Measures aimed at stopping these ills are not adequately captured, instead of
stopping gas flaring there are monetary penalties for such infractions. These
infractions are either encouraged or are worst perpetrated in collaboration
with the IOCs.
According
to Felix Ayanruoh The Nigerian government has frequently
failed to meet its obligations to respect, and protect human rights, while
providing security to the oil industry, because of its importance to the
economy. The PIB presented both a legal and regulated frameworks for corporate
accountability in the Nigerian jurisprudence. Section 118 proposes the
establishment of the Petroleum Host Community Fund - requiring a detailed and
transparent financial distribution system to ensure that communities benefit
directly from petroleum activities. It provides for direct financial transfer
of 10% after-tax profits derived from upstream petroleum operations in onshore
areas and shallow waters areas to the communities and littoral states.
Let
us examine what the The petroleum industry bill 2012 states on the PHC Fund.
Section 125 and 126 states that there shall be
established a fund to be known as the Petroleum Host Communities Fund (the
"PHC Fund") and the PHC Fund shall be utilized for the development of
the economic and social infrastructure of the communities within the petroleum
producing communities
Section
127. Beneficial entitlements to the communities
(1) Each upstream
petroleum company shall remit on a monthly basis 10% of the net profit (net
profit defined as the adjusted profit minus the Nigerian Hydrocarbon Tax and
minus the corporate income tax) as follows:
(a) for profit
derived from petroleum operations in onshore areas and in the offshore shallow
water areas, all of such remittance directly into the PHC Fund;
(b) for profit
derived from petroleum operations in deepwater areas, all of the remittance
directly in equal shares to each State Government of the eight littoral states
of the Federal Republic of Nigeria.
(2) At the end of
the fiscal year, each upstream petroleum company shall reconcile its remittance
pursuant to subsection (1) of this section with its actual filed tax return to
the Service and settle any such difference.
(3) The
contributions made by each upstream petroleum company pursuant subsection (1)
of this section, will constitute an immediate credit to its total fiscal rent obligations
as defined in this Act.
(4) Where an act
of vandalism, sabotage or other civil unrest occurs that causes damage to the
upstream facilities allocated to a community, such community shall forfeit its entitlement
to the portion of the PHC Fund determined by the Inspectorate to be sufficient
for repair and remediation of the damage.
Of
particular interest is sub section 4 which states that acts of vandalism,
sabotage or other civil unrest which cause damage to facility shall cause the
community to forfeit its share of the funds as determined by the fund managers.
This is crucial to keeping the peace and I am surprised that Hon. Ishaka and
his 40 wisemen and women do not see the reason for this proposal. They must
have done the math to arrive at several billions of naira to the host
communities. I also am amazed at what the likes of Dakuku Peterside (who is
Chairman on petroleum) and other Niger
delta sons are doing to protect the rights of the host communities. If Hon.
Ishaka Bawa from Taraba state does not understand the full import of the
reduction , then I wonder what kind of laws they (these members) would start
acting on in the next administration to the detriment of Niger Deltans. This is
clearly anti-people and should not be accepted.
Sami Okpolagha-Abel
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