Proposed PIA amendment: HOSTCOM suggests areas for alteration

As the National Assembly is set to amend the Petroleum Industry Act (PIA),
the Host Communities Producing Oil and Gas (HOSTCOM) have suggested some areas in the Act to be altered in the interest of robust oil and.gas industry that has been the yearning of the federal government.

The host communities who claimed that they have been excluded in the current legal instruments when it was passed into law in 2021, called on President Muhammadu Buhari to send the PIA back to the National Assembly as an executive bill for amendment.

In the memorandum which was seen by CAPITAL POST on Thursday, and signed by the National President of HOSTCOM, Dr. Benjamin S. Tamaranebi lamented that the exclusion of host communities during the inauguration of the Steering Committee as well as the appointment of the various governing boards of NNPC LTD, the Nigerian Upstream Regulatory Commission and the Nigeria Midstream and Downstream Regulatory Authority was unfortunate to the much desired oil industry.

According to the memorandum, Chief Tamaranebi explained that the host communities were supposed to be first in hypothetical order in terms of appointments, hence, they were calling on the parliament to correct the anomaly.

“We recommend that section 11 subsection 2 be amended to read “The Board of the Commission shall consist of:-One non-executive chairman, two non-executive commissioners, the chief executive officer of the commission (in this Act referred to as “the Commission chief executive ”

“Also two other executive commissioners who are responsible for finance and accounts and exploration and acreage management and one representative of the Authority not below the rank of Director

Continuing he said one representative of the Ministry not below the rank of Director and one representative of the Ministry of Finance.

“We therefore recommend that section 28 subsection 2 be amended to read “the commission shall indemnify the commission chief executive, commissioners or any officer of the commission for any liability incurred as a result of willful misconduct or gross negligence.

He said section 240 subsection (2) should be amended to read

“Each proponent or operator, where applicable, shall make an annual financial contribution to the applicable host communities development trust fund of an amount equal to 3% of its annual operating expenditure of the proceeding financial year in the upstream petroleum operations,not less than 5% of the OPEX and CAPEX of the company or 5% of the maintenance/(construction) cost payable into the trust account annually from the midstream petroleum operations.

This he said should not be less than 5% of the actual annual (Opex and Capex) of the Operating Company’s preceding year expenditure be paid as contribution to the fund from the downstream petroleum operations affecting the host communities for which the applicable host communities development trust fund was established to ensure transparency, efficient legal framework, good governance, accountability and Host Communities sustainable development for a favorable working environment.

He recommended that section 104 (2) should be amended to read “money received under this section shall be paid to the Host Communities Sustainable Development Trust Fund” since section 104 subsection (4) has clearly stated that “money received from gas flare penalties by the Commission under this section, shall be for the purpose of environmental remediation and relief of the Host Communities of the settlor on which the penalties are levied.

“Section 257 should be amended as HOST Communities are not contractors to any company or responsible for any negligence for any contract but only will be responsible if the surveillance contract is given to the Host Communities.

He said they felt worried about Section 240(2) on how industry players carefully removed down stream and midstream from remittance, which is the major issue in spillages and soot.

“We recommend that Section 52 (7d) be amended to read “money received from gas flaring penalties by the Commission under section 104 of this Act shall be transferred to the Host Communities Sustainable Development Trust Fund for the purpose of environmental remediation and relief of the Host Communities of the settlor on which the penalties are levied:”

He recommended that section 51 subsection 2 be amended to read “the Authority shall indemnify the Authority chief executive, director or any officer of the Authority for any liability incurred as a result of willful misconduct or gross negligence.

He recommended that, “Section 52 (7d) be amended to read “money received from gas flaring penalties by the Commission under section 104 of this Act shall be transferred to the Host Communities Sustainable Development Trust Fund for the purpose of environmental remediation and relief of the Host Communities of the settlor on which the penalties are levied:”

They also recommended that section 52 subsection 8 be amended to read, “The Authority shall ensure the prompt payment of all such sums directly into the Host Communities Sustainable Development Trust Fund’s account.

“We recommend that section 59 Subsection (2) The Board of NNPC Limited shall be appointed by the President and composed of a non-executive chairman, the chief Executive of NNPC Limited, the Chief Financial Officer of NNPC Limited, a representative of the Ministry of Petroleum not below the rank of a director

“Also a representative of the Ministry of Finance, not below the rank of a director; and six non-executive members with at least 15 years post qualification cognate experience in petroleum or any other relevant industry with at least 15 years post-qualification experience.

The national president recommended that section 103 subsection (1) be amended to read as follows,

“Financial contribution for remediation to environmental damage must be in compliance with the clean development mechanism (CDM) ghg project development cycle criteria which shall be clearly stated out in the Project development methodology and demonstrated in the Project Design Document (PDD).

He said, Since the Host Communities are the direct recipients of the impact and negative effect of exploitation and exploratory activities, it would then be morally right that the environmental mitigation and remediation fund for environmental damage be transferred to the Host Communities Sustainable Development Trust Fund.

“We recommend that section 104 subsection (2) be amended to read “money received under this section shall be paid to the Host Communities Sustainable Development Trust Fund” since section 104 subsection (4) has clearly stated that “money received from gas flare penalties by the Commission under this section, shall be for the purpose of environmental remediation and relief of the Host Communities of the settlor on which the penalties are levied.

“We recommend that section 115. Compensation for acquisition of land be amended to read:

“A Permit shall be issued subject to compliance by the applicant with the provisions of the Land Use Act Cap L5 Laws of the Federation of Nigeria 2004 in respect of compensation for acquisition of land for midstream and downstream petroleum operations.

“The Governor of a State of which land is required for carrying out operations or activities shall issue a permit subject to a licence or permit from the regulatory Commission or Authority as the case may be pursuant to the Land Use Act in respect of the land and in accordance with existing state law.

“Or section 115 subsection 1 and 2 completely expunged.

“We recommend that Section 216 subsection 2 be amended to read ” the stakeholders to be consulted for any particular regulation shall be lessees, licensees, permit holders and the Host Communities that may be impacted by the regulations and such other persons that may be interested in the subject matter of the proposed regulation.

“We recommend that Section 216 subsection 5 be amended to read “Notwithstanding the provisions of subsection (1), the Commission or Authority may, in national interest and exigency of the situation, issue a regulation after conducting stakeholders consultation in accordance with subsection (3). Or be expunged.