Abuja, Sept.2, 2023: The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has threatened to revoke license of oil operators or settlors who failed to remit the three per cent statutory fees to oil communities before September ending.
The NUPRC management on Friday said its attention had been drawn to the agitation by host communities in the oil and gas producing areas of the Niger Delta region over the delay by industry settlors/operators in remitting the statutory fees.
According to the Commission in a statement, the three per cent remittance is governed by Section 235 of the Petroleum Industry Act (PIA), 2021.
The relevant section states that “Unless as otherwise provided for in this Act, failure by any holder of a licence or lease governed by this Act to comply with its obligations under this Chapter, after having been informed of such failure in writing by the Commission as the case may be, may be grounds for revocation of the applicable licence.”
“Therefore, defaulting operators (settlors) under PIA 2021 (section 235) are advised to do the needful by fulfilling their obligations and remitting the outstanding arrears without further delay.
“As the commission might be compelled by emerging circumstances to fully apply the law under section 235 of PIA 2021.
“Notice is hereby served that in a situation where defaults are not remedied by the end of September 2023, the Commission would have no option but to revoke the licence of the defaulting settler/operator,” it warned.
The commission said it understood clearly and shared in the sentiments of the host communities, especially as the PIA had suspended the Global Memorandum of Understanding (GMOU) and the Memorandum of Understanding (MOU), replacing both provisions with a new Host Community Development Trust Fund (HCDTF).
The Commission said it was fully aware of the implications of the development if allowed to fester.
It said the agitation might frustrate the Commission’s efforts at up-scaling the drive for higher foreign exchange and attracting Foreign Direct Investment (FDI) into the country.
Incidentally, it said it was also capable of truncating efforts at stabilising the value of the Naira, attaining the much-desired rebound in our national economy and improving our macro-economic status.
“The statutory provision of the PIA regarding the annual contribution of operators in the industry, under Section 240 (2) of the PIA, 2021, is very clear, and it states:
“Each settlor, where applicable through the operator, shall make an annual contribution to the applicable host communities development trust fund.
“It should be an amount equal to three per cent of its actual annual operating expenditure of the preceding financial year in the upstream petroleum operations affecting the host communities for which the applicable HCDT fund was established.
“Given the implications of allowing continued default on sustained peaceful operations and the eventual effect on national oil and gas output.
“The Commission will be minded to activate its regulatory powers in line with PIA’s provisions as stated above, to bring defaulting recalcitrant settlors into compliance,” it said.
The NUPRC management said it recently passed the Host Community Regulation and organised a mass sensitisation programme, emphasising the responsibility of settlors in host communities under the PIA, 2021 but those concerned had neglected this, thereby stoking avoidable agitations.
“The settlors are, therefore, required to perform their obligation to commence remittance of the statutory three per cent contribution,” it added.
It stated that remittance of the statutory contribution, which should have served as succour to the host communities, has sadly become a source of pain to the lawful beneficiaries.
This, it said had given impetus to actions that might affect smooth upstream operations within affected host communities, a situation that could have been addressed through routine social inclusion.
It further said that although the ultimate regulatory sanction, as enshrined in Section 238 of the PIA, was the revocation of assets, but it has been careful.
The commission however said it had been careful not to compound the already low level of investment and divestment rate and further impact negatively on production levels and the Federation revenue.
It said rather, it chose to draw a balance and be strategic in implementing the provisions of the law.