The Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari has said that the implementation of the host Communities Fund as captured in the Petroleum Industry Act will galvanise massive development of oil producing Communities.
He said this during an interview on ‘Good Morning Nigeria Programme’ on the Nigeria Television Authority.
The Federal Government had in the PIA created a Host Community Development Trust Fund to cushion the negative impact that oil exploration might have on oil producing Communities.
Under the arrangement, there would be a Board of Trustees that would manage the fund which must be incorporated within 12 months from the effective date of the Act for existing oil mining leases; and existing designated facilities among others.
In terms of how the Trust Fund would be financed, the PIA made provision that holders of Licences or Leases will contribute three per cent of the operating expenditures of the previous year in respect of all petroleum operations affecting the Host Communities.
But leaders of some Oil producing communities have described the three per cent Host Communities Fund as an insult on the oil rich Niger Delta region considering the environmental impact of their oil activities.
But speaking on the development, Kyari said that three per cent is huge considering the fact that it is calculated as a percentage of the operating cost of the oil companies.
He said with over $16bn cost of operations last year, the three per cent could fetch oil producing Communities about $500m which is larger than some items contained in the country’s national budget.
The NNPC GMD said that if effectively implemented, the three per cent Host Communities Fund will be more impactful than any of the intervention projects that had been implemented in the oil rich regions.
Te Government has significant development programs in the Niger Delta through the Niger Delta Development Commission and the 13 per cent derivation fund to oil producing states.
However, often times, the local population does not feel part of these programs and the benefit of these programs does not always effectively impact the communities that should be reached.
Kyari said the one of objective of Act is to correct this anomalies by ensuring that the host communities take full ownership of developmental projects that would be sited in their communities.
The implication of this, according to him, is that only projects that would have direct developmental impact on the people will be implemented through the fund.
He said that active participation by members of the Host Communities in the various organizational setups will ensure that the monies will be dedicated in a manner that conforms to the host community aspirations.