An automated petroleum industry intelligence digital platform has been developed for monitoring and reporting of the Host Community Development Trust (HCDT) management, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has disclosed.
The regulatory agency said the new platform, which would help promote transparency and accountability in the administration of the Trust programme, was in compliance with the provisions of the Petroleum Industry Act (PIA) 2021.
The Commission Chief Executive (CCE), Gbenga Komolafe, said on Wednesday in Abuja during the Host Community sensitization workshop on the implementation of the Host Communities Development Trust that the Commission developed the platform in partnership with an Original Equipment Manufacturer (OEM).
Komolafe said the portal was designed to meet specific requirements of the HCDT as enshrined in the PIA to aid all stakeholders, including the Settlors, Board of Trustees, Management Committees, Advisory Committees, Fund Managers and others to fulfil their obligations to the host communities.
Also, he said the platform would enable quick feedbacks from the stakeholders and the public for the Commission to carry out its regulatory oversight effectively.
The CCE said out of the 75 Host Community Development Trust the Commission has successfully approved so far, 41 have been fully incorporated by the Corporate Affairs Commission (CAC).
In addition, apart from 19 Fund Managers that have also been pre-qualified, the Commission has commenced the process of establishing a baseline of ongoing community development projects, in preparation for their migration into the HCDTs.
The workshop, he explained, was organised to give participants the opportunity to deliberate on the operation and funding of the platform to be hosted by the Commission.
Komolafe acknowledged the PIA as representing a significant shift in the way the oil and gas industry in Nigeria operates.
“It recognizes the critical role of host communities and provides a framework for their participation in the sector’s development. The establishment of the HCDT will create a more equitable distribution of the industry’s benefits and reduce the social and economic disparities in the country.
“The Commission shall continue to provide requisite support and guidance for the full implementation of the Law. Therefore, we urge all stakeholders to continue to work together to ensure the successful implementation of the PIA. We must all play our part in creating a sustainable and equitable oil and gas industry that benefits all Nigerians, particularly those in the host communities,” he said.
Speaking on the topic “Implementation of the Host Communities Development Trust, a critical statutory prescription under the PIA, 2021”, the CCE said with the unveiling of the Host Communities Development Regulations as well as the template, the Commission has now defined clear navigational path regarding the administration, management, and allocation of funds for development of host communities as well as clear grievance resolution mechanism for settlement of disputes.
He said the objective of the Commission in the workshop was to create further awareness on this very important piece of legislation and provide updates on the Commission’s activities geared towards the implementation of the regulations for Nigeria’s oil and gas industry, provide a clear roadmap for the implementation of the Host Communities Development Trust to enhance peaceful and harmonious co-existence between oil and gas industry operators and host communities, and ultimately support the development of host communities.
“While the Commission is prioritizing efforts towards increasing oil and gas production and ensuring maximum Federation revenue through the optimization of oil and gas value chain, the efforts have been constrained by myriad of challenges ranging from insecurity, low investment, de-prioritization of funding of hydrocarbon development arising from energy transition,” he said.
Currently, he confirmed, Nigeria has the technical allowable capacity to produce about 2.5 million barrels of oil per day, although due to the highlighted challenges, the current production hovers around 1.5 million barrels of oil and condensate per day.
To further stem the tide of sabotage and third-party interferences on oil and gas critical infrastructure, the CCE said the PIA has in effect domesticated the protection of the country’s oil and gas infrastructure to the Host Communities.
He said one critical milestone under the PIA was the incorporation of Host Communities Development Trust (HCDT) by the settlor provided for in Section 235 as well as appointment of Board of Trustees (BOT) by the settlor in consultation with the host communities.
“Settlors are the Oil and Gas companies operating within host communities. Section 240 (2) of the PIA stipulates that 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 community’s development trust fund was established.
“In addition, Section 247 of the Act requires the Board of Trustees (BoT) to set up a Management Committee which shall be responsible for the general administration of the HCDT Fund. The Management Committee in turn is required to set up an Advisory Committee, which advises on activities as well as monitors and reports progress of projects being executed in the community to the Management Committee. The Act requires that the host communities should be represented in the BoT, Management Committee and Advisory Committee.
“Section 244 of the Act also provides an allocation formula upon which the BoT shall, on annual basis, allocate sums of money from the HCDT fund, as follows: 75% to the capital fund to be disbursed for projects in each of the host communities; 20% to the reserve fund to be invested for the utilization of the host communities development trust whenever there is a cessation in the contribution payable by the settlor; and an amount not exceeding 5% to be utilised solely for the administrative cost of running the trust and special projects.
“In Section 245, the Act bestows the responsibility on the settlor to provide to the BoT a matrix for distribution of the trust fund to the host communities.
“On the other hand, the Act under Section 235(6) empowers the Commission to “make regulations on the administration, guide and safeguard the utilization of the trust fund and have the oversight responsibility for ensuring that the projects proposed by the Board of Trustees are implemented,” he stated.
In exercising these powers, Komolafe said the Commission had consulted widely with industry stakeholders in line with Section 216 of the PIA, 2021 and on 28th of June 2022 unveiled the Nigeria Upstream Petroleum Host Communities Development Regulations, 2022 as well as the Host Communities’ Development Trust Implementation Template to give meaning and intent to the spirit of the Act.
The workshop featured presentations on various topics, including Introduction to Industry Digital Automated Portal (IDAP) for Host Community Development; Incorporation of Host Communities’ Development Trust Fund: The Commission’s expectations and way forward; Host Community Development Trust Incorporation and CAC processes; HCDT Incorporation; Challenges and Success Stories by SPDC, and Effective project implementation tools for timely and quality project delivery; while deliberations were on Funding approach of the Industry Digital Automated Portal (IDAP) for HCD/the administration of 3% OPEX; Remittance of Outstanding HCDT Fund; and Relationship and handling of traditional institutions by HCDT.