The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has threatened to revoke licenses of settlers or operators who default in payment of the three percent remittance to host communities.
It said this is in line with provision stipulated in the Petroleum Industry Act (PIA).
The Commission in a statement obtained by the Tribune Online said it was aware of 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 governed by Section 235 of the Petroleum Industry Act (PIA), 2021.
“Recently, the Commission passed the Host Community Regulation and organized a mass sensitization programme, emphasizing the responsibility of settlors in host communities under the PIA, 2021.
“Unfortunately, this has been neglected by those concerned, thereby stoking avoidable agitations. The settlors are therefore required to perform their obligation, to commence remittance of the statutory 3% contribution,” it said.
It noted that if allowed to fester, 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 and quite unfortunately, it is also capable of truncating efforts at stabilizing the value of the Naira and attaining the much-desired rebound in our national economy and improving our macro-economic status,” it said.
It pointed that that the statutory provision of the PIA regarding the annual contribution of operators in the industry, under Section 240 (2) of the PIA, 2021, it states:
“Each settlor, where applicable through the operator, shall make an annual contribution to the applicable host communities development trust fund of an amount equal to 3% of its actual annual operating expenditure of the preceding financial year in the upstream petroleum operations affecting the host communities for which the applicable host communities development trust fund was established”.
However, it said although the ultimate regulatory sanction as enshrined in Section 238 of the PIA is the revocation of assets, “the Commission has been careful not to compound the already low level of investment and divestment rate and further impacting negatively on production levels and the Federation revenue.
“It rather chose to draw a balance and be strategic in the implementation.”
To this end, it urged defaulting operators (settlors) under PIA 2021 (section 235) to fulfill their obligations by remitting the outstanding arrears as it might be compelled to fully apply the law.
“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,” the statement reads.
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