To ease regulatory compliance and oversight functions and enable operators in the Nigerian oil and gas industry meet regulatory requirements in a timely, efficient, cost-effective manner, an online digital platform was on Friday unveiled in Abuja.
The unveiling was performed by the petroleum industry regulatory authority, the Nigerian Upstream Regulatory Commission (NUPRC) in partnership with industry stakeholders.
The Commission said the cutting-edge online platform was in line with its statutory mandate as the regulator of the upstream oil and gas sector.
The digital solution known as HostComply was designed to streamline reporting of environmental, social and governance (ESG) management for operators, host communities, and the regulators, which is a cardinal requirement of the Petroleum Industry Act (PIA) 2021.
Given the friction often experienced between operators in the petroleum sector and their host communities, the Commission said HostComply was strategically developed to offer comfort to the Host Community Development Trust (HCDT) by providing stakeholders with a robust technological tool to interface and engage with the settlors (operators) and professionally manage projects in their respective host communities in conformity with ESG global best practices.
The digital solution, the Commission explained, would revolutionalise HCDT management and ESG reporting, by fully and transparently eliminating human interference.
Chapter 3, Section 235(1) of the PIA (2021) requires “the settlor to incorporate the host communities development trust for the benefit of the host communities for which it is responsible.
Section 235(4) states: “The settlor shall for the purpose of setting up the trust, in consultation with the host communities, appoint and authorise a board of trustees (“the Board of Trustees”), which shall apply for registration by the Corporate Affairs Commission as a corporate body under the Companies and Allied Matters Act in the manner provided under this Chapter”.
“The HostComply therefore offers numerous advantages to the operating companies (settlors) and the host communities, including streamlining reporting and monitoring obligations, building trust and credibility, providing a centralised system for managing data related to community development and ESG reporting, ensuring compliance with regulatory requirements and building trust with communities, investors, and other stakeholders, to ramp-up oil production and revenue for the settlors and the Federal Government; providing business analytics that will help settlers, regulators and other stakeholders identify trends, opportunities, and areas for improvement in their community development and ESG reports,” the Commission Chief Executive, Gbenga Komolafe, said at the unveiling.
The CCE said the portal would enable the settlor to upload the incorporated HCDT register, upload the 3% operating expenditure (OPEX) by assets for verification by the Regulator; track, analyse, and report on the use of funds for community development initiatives and foresee failure points by leveraging the data insights and mitigates against them.
For the HCDT, he said the portal would provide a consistent and predictable administrative environment for interfacing with the settlors and the regulator, allow the HCDT to upload and showcase projects to be executed by the communities, provide easy proof of 3% OPEX to be paid by settlors as verified by the regulator, as well as provide an opportunity to measure and monitor distributional equity amongst the communities.
The HostComply, the NUPRC Chief explained, would allow the regulator to detect and identify non-compliant situations through IT forensics and compliance Intelligence tools, real-time monitoring of the progress of projects being executed by the HCDT, issue demand notices on the payment of the 3% OPEX contribution by the settlors and verify the 3% OPEX contribution and its distribution.
For civil society organisations and the public, he said the portal would allow an open common framework for information gathering to monitor accountability and probity in the management of 3% OPEX at the community level, as well as public education, enlightenment, mobilisation, monitoring, oversight, whistle-blowing, observation and feedback.
Urging stakeholders to fully utilise the portal to ensure regulatory compliance with the provisions of the law, NUPRC Chief indicated that failure of compliance has serious implications and attracts sanctions, including revocation of licence or lease.
“Pursuant to the following sections of the PIA, 2021, and for the avoidance of doubt, the licence or lease of a settlor may be revoked if it fails to comply with the host communities’ obligations under Section 96(n) of the Act,” the CCE said.
On the failure to incorporate host communities development trust, he drew attention to the provisions of Section 238 which say: “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 being informed of such failure in writing by the Commission as the case may be, may be grounds for revocation of the applicable licence or lease”.
When fully deployed, he said the portal would have other capabilities, including enabling approvals of the constitution, winding up and dissolution of the Trust and fund; verification of account details of the Trust, annual audited report of the 3% OPEX computation and Contribution to the fund.
“It is also a platform for the review of all reports generated by the trust; enables the annual registration of the fund managers with the Commission and allows for the monitoring of the management of the reserve fund; interface for submission of complaints and petitions, reporting of fraud, breaches, and malpractices; and an Administrative Module which would act as a performance evaluation and analytics dashboard for each user group and general overview, management of access rights and permissions as well as review of audit trails,” the CCE said.
The underlined NUPRC’s commitment to foster stronger relationships between operators, host communities and regulators, in addition to enhancing the dividends of petroleum resources for the prosperity of all stakeholders.
He described HostComply as a representation of a significant step forward in achieving the Commission’s vision and a revolutionary solution that would transform the way critical stakeholders handle Trust Management and ESG Reporting.
Information about HostComply can be found at hostcomm@nuprc.gov.ng.
