The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari says 3% to host communities is higher than 30% of profit oil and gas for frontier exploration.
Gatekeepers News reports that the NNPC GMD Mele Kyari said the allocation for host communities has a low percentage but a bigger value.
Kyari made this known during an interview on an NTA programme on Tuesday.
Following the signing of the Petroleum Industry Bill (PIB) into law by President Muhammadu Buhari on August 16, the Minister of State for Petroleum Resources, Timipre Sylva was appointed as the head of the Petroleum Industry Act implementation committee.
Although many described the signing of the bill by the President as a right step, some leaders in the Niger Delta have criticised the 3 percent annual allocation to host communities from the operator’s operating expenditure.
According to them, it is a “meagre portion” compared to the level of environmental degradation and development in the region – some even frowned at 30 percent allocation for the search of oil and its discovery.
Kyari during the interview the three percent from operating expense is bigger than the 30 percent allocation from profit oil and gas.
He said, “For instance, when you say 30 percent profit oil and gas from NNPC shares or from PSC, it is a very small number. The percentages appear very outrageous but 30 percent of what? Nobody has sat down to look at it. When you say profit oil 30 percent, it probably comes down to less than $400 million per annum.
“But when you come to the host communities, you have three percent of our operating expense. We spent about $16 billion in fiscal 2020 in our operating expenses across the industry. So when you take three percent of that number it comes above $500 million far above the budget of NDDC.
“You can see that those percentages don’t reflect the realities that we are trying to achieve by this. And for profit oil, there are lots of uncertainties around it because if you don’t make profit it is zero but you must spend money to do operating expenses.
“We are very sure that provisions that are meant for host communities will be implemented and delivered.”
According to him, the PIA will “proffer lots of prosperity for our country” in both short and long term.
Kyari stated that there will not be difficulties implementing the new law, adding that the concerns from stakeholders have been taken into consideration by the implementation committee.
The NNPC Boss said the concept of host communities in the PIB originated from the executives.
According to him, the host community fund is completely within the control of the host communities.
He said, “It is not a fund that will be managed by oil companies.”
