PIB, host communities and all that…
The National Assembly is currently considering legislation to replace a raft of laws that have governed the country’s petroleum industry since at least 1969 and which review has been in the offing this past decade. This is a vast and complex undertaking which the Senate sensibly decided to tackle in three phases, unlike the House […]
The National Assembly is currently considering legislation to replace a raft of laws that have governed the country’s petroleum industry since at least 1969 and which review has been in the offing this past decade. This is a vast and complex undertaking which the Senate sensibly decided to tackle in three phases, unlike the House of Representatives which wants to treat the Petroleum Industry Bill whole. Senate has already approved the first part titled Petroleum Industry Governance Bill (PIGB); it deals with the management or governance of the industry and the institutions that will participate therein. “Other areas dealing with communities, stakeholders, financing, assets ownership and related upstream matters” will be taken up in the next phase of legislation.
The House of Representatives is considering three bills that make up its version of the Petroleum Industry Bill, one of which is devoted to the concept of Host Communities. The bill makes generous provisions for host communities via a Petroleum Host Communities Trust Fund to be funded from both the amount accruable to states as derivation and royalties paid to the federal government. An elaborate, yet curious formula for sharing these funds is then prescribed with the list of beneficiaries thereby considerably widened. Now, it is not just the oil-producing communities that will benefit, but any and every community that has a nodding acquaintance with the oil industry. In this wise, communities through whole land oil pipelines pass, those that are the sites of refineries and depots are entitled to partake. In practical terms, this means every community, every local government area from Warri to Kaduna, for example and other areas alongside the nation’s pipeline grid is a “host community.” The chicanery behind this elastic definition of the concept of host communities and the geographical spread it gives rise to is clear: to lure unwary legislators to support this sleight of hand since their communities may also benefit, unmindful of the wider implications. Should this come to pass, every federal economic undertaking or enterprise – airports, dams, power stations, highways, etc – will be “adopted” by their host communities in order to benefit from the Trust Fund. This phenomenon is already evident in the case of federal universities which have been captured by host communities: university management are impugned to give them preferential treatment in staff employment, contracts and even student admission. Some communities have even given themselves veto power over the appointment of top university management- Vice -Chancellor, Registrar, Bursar and others.
The proposed host community trust fund is a negation of the principle of derivation enshrined in the extant revenue allocation formula. From the beginning of the history of revenue allocation, host community interest has been captured with the provision for derivation – host community then understood as regions and, later states. These political entities/authorities stood on behalf of the people. It is sophistry to introduce host communities in to the equation. Host communities in the Niger Delta pushing for greater recognition vis- a-vis their contribution – including direct cash transfers – should have recourse to the revenues going to the states under derivation. Delta state already understands this as it has established a state oil – producing areas development commission (DESOPAC) to address the needs of those areas, with funding from the state’s allocation for derivation. Delta state should go the whole hog by direct cash grant to the communities, in addition to – or even in place of – funding infrastructural development.
National Assembly should resist the blandishments of those pressing for a stake for host communities in the petroleum industry in the manner presented, including shareholding in the JVCs. The Revenue Mobilisation, Allocation and Fiscal Commission is the best forum to make the case for improved revenue allocation to oil-producing states – and communities if need be.
M T Usman [email protected]