The Petroleum Industry Act 2021 is here finally after its 21 years journey. As expected, reactions upon reactions are beginning to pour in from some stakeholders and few others on the issues of Federation Account, host communities, labour etc.
Apart from some grey areas, I do not think the Act is bad as being painted. As said in my then reaction to the outrage that greeted the passage of the Bill as one of those who worked on it, the 3% for the HCDT Fund isn’t what some are seeing it as. Comparing it with 30% of profit for frontier basins exploration is poor knowledge of the Act.
The 3% is not from the profit like the 30% of the frontier explorations, it is the 3% upstream and 2% others of actual operating expenditure (OpEx) of all companies granted oil prospecting licences or mining leases or those operating on behalf of joint venture partners called “settlors”, in the immediately preceding calendar year; and mind you this doesn’t affect the existing 3% to the NDDC.
Anyone with working knowledge of the OpEx of these companies will know that the 30% proceeds of the sale of profit oil and profit gas for Frontier Exploration Fund is nothing compared to the 3% OpEx for the Host Communities Development Trust Fund.
And like I said before, these Frontier Basins are just basins with oil deposits but with no link to the Niger Delta or Atlantic Ocean. The pre-Cambrian basement complex in the South West is the largest in Nigeria, there is Illumeden Basin in the North West too and there are others. There have been ongoing works on those like Benue Trough, Gongola, Anambra Basins etc for some years under FES in NNPC.
Like any other stakeholder, I have reservation for some Clauses too. The “may” instead of “shall” operational verb and none restriction of the composition of the Board of Trustees and members of the Host Communities Development Trust Fund Management Committee to only only host communities, saying “”may” include persons of high integrity and professional standing who may not necessarily come from any of the host communities”; the Act not attending to energy transition; and the clause that a host communities will forfeit the cost of repairs in the event of vandalism, sabotage and other civil unrest causing damage to petroleum facilities or disruption of production activities in their domains, are parts of the Act I’m not that comfortable with, but like I said before, we can begin like this and have the grey areas evened out by subsequent amendments.
Akin NG, a lawyer, political analyst, writes from Abuja.