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 PIA 3%, 30% debate: PANDEF, host communities, others counter Kyari

PIA 3%, 30% debate: PANDEF, host communities, others counter Kyari


PAN Niger Delta Forum, PANDEF; Host Communities of Nigeria, HOSTCOM, and other stakeholders of oil-rich Niger Delta, yesterday, disagreed with Group Managing Director of Nigerian National Petroleum Corporation, NNPC, Mr Mele Kyari, over his claim that three per cent for Host Communities Trust Fund was higher than 30 per cent for exploration on Frontier Basin in the new Petroleum Industry Act, PIA.

But Senator Christopher Ekpenyong representing Ikot Ekpene senatorial district, Akwa Ibom State at the National Assembly and an economist in Delta State, Mr Sunny Onuesoke, agreed with Kyari that the three per cent fund for host Ccommunities, which is an operating cost, was better than a higher percentage based on profit.

PANDEF, mouthpiece of the coastal states of Niger Delta, in a statement by National Publicity Secretary, Ken Robinson, said: “The statement by Mr Kyari, the Group Managing Director of NNPC, that the three per cent provision for the Host Communities Development Trust in the Petroleum Industry Act is higher than the 30 per cent allocation for Frontier Exploration, is absurd and presumptuous.

According to PANDEF, “How can anyone make such an irrational comparison? It is adding insult to injury, to say the least.

“Oil and gas host communities in Niger Delta bear the brunt of the industry operations. With colossal adverse effects on the region’s hitherto luxurious ecosystem; the indigenous people’s means of livelihood have been grossly degraded, with little, if any, improvement in their standard of living.

“And so, it is awful for anyone to compare, for any reason, the paltry three per cent provision for the Host Communities Trust Fund to the humongous 30 per cent allocation for the nebulous Frontier Exploration Fund. It is baseless and makes no sense.

“There are many questions that are begging for answers. What is the rationale for allotting 30 per cent of the ‘whatever’ profit of the new NNPC Limited for Frontier Exploration? Why was it jerked up to 30 per cent from, we understand, an initial 10 per cent provision? What percentage of cocoa, coal and groundnut earnings was used for the exploration of oil in Niger Delta?

“Kyari’s expression reflects the uncouth contempt and injustice being carried out against Niger Delta. The nation cannot continue in this trajectory.”

National President, HOSTCOM, Chief Benjamin-Style Tamaranebi, who reacted to the controversy, said: “We keep hearing from Minister of State (Petroleum) and GMD, NNPC, that 30 per cent NNPC profit is lesser than three per cent Host Communities’ operating cost.

“As HOSTCOM, we are not against the PIA entirely, but we continue to appreciate President Buhari for seeing this bill through after 63 years of exploitation and exploration. Today, we can say we have gotten a law but some portions of the law are obnoxious and repugnant to natural justice, which is why we are crying.

“GMD Kyari Mele is entitled to his opinion because we are not privileged to what is happening in the corporation and it is like a cook, who went out to the market to get foodstuff and prepare a meal for guests, the guests only know what was placed before him.

“What we are saying is that they should allow us have representation in their midst, they will  in turn inform us of the dealing,  then we will be convinced that three per cent is higher than the 30 per cent  NNPC profit, and there will be no more doubts again.

“Just imagine the PIA steering committee, did they remember to bring in critical stakeholders like HOSTCOM in the steering committee? The answer is no, which means we are not important and we are the voice of host communities accepted by everyone as their representatives, yet not valued by the government.

“If they can value associations like tanker drivers, market women, road transport workers, but could not engage host communities’ organisation that has structure from states, local governments to clusters and communities in all producing and impacted communities in Nigeria, do you not think it is something to worry about?” he said.

Straight-out garbage— HM Ayemi-Botu

Pere (traditional ruler) of Seimbiri Kingdom in Delta State and former national chairman, Traditional Rulers of Oil Minerals Producing Communities of Nigeria, TROMPCON, HM Charles Ayemi-Botu, told Vanguard: “That is arrant nonsense. Kyari should go and tell that to the marines or to Musa. By the way, what is the rationale in making such arrogant statement? No person in his true sense of reason will make such a ridiculous, unguarded and blasphemous statement.

“He should hide his head in shame, for the opportunity in becoming the Group Managing Director of NNPC without knowing the difference between three per cent and 30 per cent. He may best be described as a round peg in a square hole. We are in government of nepotism and winner takes all syndrome.

“Kyari did not expatiate on the details that informed such unguarded, erratic and stupid statement. Host communities are requesting nothing less than 10 per cent allocation to assuage the age long ecological degradation/devastation, environmental hazards, pollution of our only source of lively hood, our ecosystem has been totally destroyed, acid rains as well as the depletion of the ozone layers bring diseases, culminating in infant mortality/premature death etc.

“Yet we are not commensurately considered for a better deal, instead 30 per cent frontier exploration, which is a fraudulent device to siphon our God-given wealth is introduced, and I bet you the much talked about exploration will be a nullity because they cannot play God.”

Misleading appraisal —Wills, stakeholder

Knowledgeable indigene of oil and gas rich, but neglected Oluasiri clan in Nembe LGA of Bayelsa, Iniruo Wills, said: “That is an utterly irrelevant comparison. It is a mechanical attempt at diverting attention from the gross injustice of treating communities as a nuisance factor.

“The real question is how does three per cent of mere operational expenses compare with the 10 per cent equity originally proposed at the beginning of the PIB journey or with the 10 per cent of profits that it was first watered down to by then President Jonathan and oil minister, Diezani Allison-Madueke, before Bukola Saraki’s National Assembly later cannibalised it down to 2.5 per cent of profits, setting the stage for the current crop of executives and legislators to do this final havoc?

“They are almost succeeding in using deceptive comparisons and fictional figures to make people forget that the three per cent of operational expenses is not much more than three per cent of administrative expenses, having first removed capital expenses (CAPEX) from the equation.

“It is in principle, for example, a far cry from the three per cent of ‘annual budget’ applicable under the NDDC Act, though even that has been highly manipulated and evaded by the oil companies.”

Govt has no business exploring oil, gas—Gbemre, activist

Coordinator, Niger Delta Peace Coalition, Zik Gbemre, said: “The comparison is immaterial, a meaningful distraction. It is extreme corruption for government to fund oil and gas prospecting. That is the reality Kyari would not mention.

“It is not the responsibility of the Nigerian government to explore for oil and gas. Shell BP came to Nigeria as a private oil exploration and production firm before the indigenisation decree that compelled the company to cede shares to the Nigerian government.

“The nation’s first refinery in Port-Harcourt was solely built, funded by Shell BP. The company’s exploration and production never had any Joint Venture funded by the Federal Government then.

“The operating private exploration oil companies should go and explore wherever they sense meaningful prospects for oil, condensate and gas. If the PIA stipulates that NNPC should be run like a private company with shareholders and pay tax as a private company, then of what need is the Act stipulating that 30 per cent should be used by the Federal Government to fund exploration of oil in the northern Nigeria?”

Unreliable figures —Igbini, engineer

National president, Vanguard for Transparent Leadership and Accountability, VATLAD, Mr Emmanuel Igbini, declared: “From my deep knowledge of the Nigerian upstream petroleum sector, I know that data and figures thrown at Nigerians by the International Oil Companies, IOCs, are not credible at all.”

Deceptive analogy — Omare, minority activist

Minority rights activist, Eric Omare, said: “I do not have the statistics as per the total yearly operational cost of oil operations in Nigeria and the NPPC yearly profit oil. However, the key point in the GMD’s comment, which is correct is that the criteria for arriving at the Host Communities Trust Fund and the Frontier Areas Fund are not same.

“Whereas, the Host Communities Trust Fund is based on operational cost of an Oil Mining Lease holder (Settlor) in the preceding year, that of Frontier areas is based on NNPC profit. Again, the Host Communities Trust fund is to be used for development of the communities, but the Frontier fund is to be used for investment in new oil fields in some specified areas in Nigeria. That is why the statement that whereas three per cent was given to host communities and 30 per cent to northern states is not a correct statement, both factually and in content.”

Economical with truth — Okodi-Iyah, engineering consultant

John Okodi-Iyah, an engineering consultant in Akwa Ibom State, said the NNPC boss was economical with the truth.

“They can deceive some of the people sometime or all the time, but not all the people, all the time,” he said.

Ekpenyong backs Kyari

On the other hand, Senator Ekpenyong said: “The three percent is the operating expense of all the IOCs, within the host communities they operate. And the companies must pay this three percent operating cost whether they are making profit or not.

“But the 30 per cent allocation for exploration on the frontier basin is based on profit from the NNPC. It may or it may not come. For instance, as a businessman, if I borrow money from a bank as equity, invested into a business venture, then declare the profit sharing, if the business is not bringing any profit, it means there will be nothing to share.

“If it is based on operating cost, whether you borrowed the money or not, you must pay, that is why three per cent as operating cost is better than 10 per cent or 30 per cent based on profit. The operating cost is mandatory fund that you pay whether you make profit or not.”

3% not a bad deal — Ambakederimo

An indigene of oil and gas rich Agbere community in Bayelsa State, Joseph Ambakederimo, said: “We need to fully understand this frontier basin exploration for hydrocarbons and the quantum of resources that is to be allocated for the exploration of hydrocarbons.

“The PIA says the 30 per cent of profit oil, which is applicable to production sharing contracts (PSC) to be set aside and not 30 per cent of OPEX, which of course would always be higher.

“The three per cent for host community’s development fund is on the OPEX just like what is applicable to the three per cent NDDC payable by the oil and gas companies.

“What is paramount is the utilization of the funds accruing to the communities and the resultant positive effects it will have on these communities. No one from the region is talking about the judicious application of the three per cent whenever it begins to take effect, all what we are after is the value. We should not be running away from the real issues that shall become problematic at the end of the day.

“And l also hope this three per cent is applicable to the indigenous oil and gas companies and if it does, the three per cent is quite a lot.”

I agree, but…— Onuesoke, economist

An economist, Chief Sunny Onuesoke, said: “I quite agree with him on a simple mathematics basis, but the issue is not for him to prove or point to that direction for the Niger Delta people. The simple question is define what frontier exploration basin is.

“Is the frontier basin only to find oil in the North? What are the yardsticks to measure the cost of exploration in such areas when we have not even talked of finishing the ones we are already operating in the Niger Delta?

“Another serious observation from the seismic point of view is purely if the cost of exploration is commensurate with the prevailing crude oil price. The  proper method of  exploration of crude do not need to spend huge amount to discover oil because oil price is about to nose dive totally due to less global consumption in view of alternative energy in place of oil.

“What the oil bearing communities are saying is just up on the PIA allocation index to five per cent.”

Makes a little sense —Nwauju, NDRA

Spokesman, Niger Delta Rights Advocates, Darlington Nwauju, said: “30 per cent of oil and gas profit from my reading of the arguments placed by the NNPC GMD is less than the operational expenses across the industry.

“For example, last year (2020), the operational expenses of the industry are little above $16 billion and if you are to do the mathematics of the three per cent of the $16 billion, you will have above $500 million going to the host communities.

“However, 30 per cent of profit is an uncertainty. Maybe one, two or $10 billion. It is built around an uncertain profit figure in an industry that you may not be able to predict what will happen the next hour.”

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