NUPRC enforces 3% oil levy, registers 172 community devt trusts

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The Nigerian Upstream Petroleum Regulatory Commission has registered 172 Host Communities Development Trusts established by oil and gas companies under the Petroleum Industry Act.

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The development comes as the regulator intensifies enforcement of the PIA provision requiring oil and gas companies, known as settlors, to contribute three per cent of their operating expenditure in the preceding financial year to the Host Communities Development Trusts.

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The NUPRC Commission Chief Executive, Oritsemeyiwa Eyesan, disclosed this when she led the commission’s management to a meeting with the leadership of the Revenue Mobilisation Allocation and Fiscal Commission in Abuja.

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The meeting focused on developments in the upstream petroleum sector and the implementation of provisions of the PIA, particularly those relating to host communities and the obligations of oil and gas companies.

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The disclosure was contained in a statement issued on Sunday by the Head of Media and Corporate Communications at the NUPRC, Eniola Akinkuotu.

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The statement read,

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“The Nigerian Upstream Petroleum Regulatory Commission says 172 Host Communities Development Trusts have been incorporated by oil and gas companies (settlors) so far.”

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Recall that in early August, the Fiscal Commission directed the NUPRC to dissolve a disputed Host Community Development Trust within 48 hours over concerns about its constitution and representation of affected oil-producing communities.

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The directive followed an investigative hearing into the operations of Sterling Oil Exploration and Energy Production Company and the implementation of the Host Community Development Trust provisions of the Petroleum Industry Act.

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Giving clarity on the issue, Eyesan said the commission had established procedures and regulations to ensure that the trusts were properly constituted and that settlors fulfilled their financial obligations.

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“We have laid out procedures for doing things, and we have put regulations in place to streamline the process. So far, we have registered 172 HCDTs, and we have been able to manage contributions by settlors,” the NUPRC boss stated.

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The PIA, which came into force in 2021, introduced the Host Communities Development Trust as part of measures to give oil-producing communities a direct stake in petroleum operations and promote sustainable development in areas hosting oil and gas facilities.

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Under the law, settlors are required to incorporate a Host Communities Development Trust and make annual contributions equivalent to three per cent of their operating expenditure of the preceding financial year.

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The funds are intended to finance projects and programmes that improve the social and economic conditions of host communities while also promoting peaceful relations between communities and petroleum companies.

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Eyesan said the trusts had already begun funding critical infrastructure in several communities, including schools and hospitals.

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According to her, the projects have contributed to improved relations between oil-producing communities and operators, reducing tensions that had previously disrupted petroleum operations. She said the resulting improvement in peace and stability had also supported increased crude oil production.

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The NUPRC boss, however, acknowledged that the implementation of some trusts had been affected by disputes, particularly disagreements over the constitution of their boards of trustees.

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She said the commission had been working to resolve the disputes and ensure that the trusts operated effectively in the interest of the country.

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Eyesan also pointed to the NUPRC’s Alternative Dispute Resolution Centre as an important mechanism for resolving grievances arising from the implementation of the host communities provisions.

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She said the centre had played a “pivotal role” in addressing some of the disputes involving host communities and operators.

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The NUPRC boss further clarified that although RMAFC had expressed interest in the management of funds meant for host communities, regulatory oversight of the trusts remained within the mandate of the upstream regulator.

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She assured the commission that NUPRC would continue to enforce the relevant provisions of the PIA. The commission boss further promised to investigate the lingering dispute between Sterling Oil Exploration and Energy Production Company and its host community in Anambra State.

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The dispute involving SEEPCO has attracted attention amid broader concerns about relations between oil companies and communities hosting petroleum operations.

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Speaking at the meeting, the Chairman of the RMAFC, Mohammed Bello Shehu, commended the NUPRC for reforms in the upstream sector which, according to him, had contributed to increased oil production.

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Shehu said the upstream petroleum industry remained critical to the commission because of its significant contribution to revenues accruing to the Federation Account.

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He called for stronger cooperation between the two agencies to ensure that reforms in the oil sector translated into greater revenue and improved development outcomes for Nigerians.

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The RMAFC chairman also thanked the NUPRC management for honouring the commission’s invitation and expressed the readiness of both institutions to deepen collaboration in the interest of the country.

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The establishment of the HCDTs is one of the major changes introduced by the PIA to address decades of conflict and underdevelopment in oil-producing communities.

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Before the PIA, disputes over inadequate benefits, environmental degradation and limited participation in petroleum operations frequently triggered protests and disruptions of production.

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The three per cent contribution is therefore intended to provide a structured funding mechanism for community development while encouraging more stable relationships between operators and their host communities.

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With 172 trusts now registered, the NUPRC’s challenge will be to ensure that the funds are transparently managed and translated into sustainable projects that improve living conditions in oil-producing communities.

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