PIA: Reps probe oil companies over non-remittance of 3% host communities’ fund

The House of Representatives on Wednesday resolved to investigate oil and gas producing companies operating in Nigeria over their alleged failure to release 3% of their annual operating expenditures to host communities and refusal to establish the Host Communities Development Trust Fund (HCDTF) as mandated by the Petroleum Industry Act (PIA) 2021. The decision followed […]

The House of Representatives on Wednesday resolved to investigate oil and gas producing companies operating in Nigeria over their alleged failure to release 3% of their annual operating expenditures to host communities and refusal to establish the Host Communities Development Trust Fund (HCDTF) as mandated by the Petroleum Industry Act (PIA) 2021.

The decision followed the adoption of a motion sponsored by Hon. Hart Cyril Godwin titled: “Need to Investigate Failure of Oil/Gas Producing Companies to Release 3% of their Annual Operating Expenditures to Host Communities and the Refusal to Incorporate Host Communities Development Trust Fund under the Petroleum Industry Act, 2021.”

Presenting the motion on the floor of the House, Hon. Godwin recalled that the PIA, enacted in 2021, was designed to provide a comprehensive legal, regulatory, and fiscal framework for the petroleum sector while ensuring sustainable development of host communities affected by oil exploration and production activities.

He noted that Section 235(1) of the Act mandates every oil licensee or lessee (known as a settlor) to incorporate a Host Communities Development Trust Fund for the benefit of the communities in their areas of operation, while Section 236 requires that such Trusts be incorporated within 12 months from the Act’s commencement.

The lawmaker further cited Section 240(2), which compels each company to make an annual contribution of 3% of its actual operating expenditure from the previous financial year into the Fund.

Hon. Godwin, however, expressed concern that many oil companies have violated these provisions, with some failing to incorporate the Trust Funds at all, while others have not remitted the mandatory 3% contributions.

He warned that this neglect has stalled development in oil-producing host communities, depriving residents of basic amenities and worsening socio-economic hardship in the Niger Delta and other affected regions.

“The refusal of these companies to comply with the PIA undermines the spirit of the law and continues to frustrate the development objectives for which it was enacted,” Godwin stated, adding that the failure of regulatory agencies to enforce compliance has emboldened defaulting companies.

Citing Section 297(1) of the PIA, which prescribes administrative penalties for daily breaches, and Section 238, which provides for the revocation of licenses or leases for failure to establish a Host Communities Development Trust, the lawmaker called for decisive action.

Following deliberations, the House resolved to mandate its Committee on Host Communities to investigate the failure of regulatory agencies and oil companies to comply with the PIA’s provisions and report back within four weeks for further legislative action.