Reps to Probe Oil Companies for Failing to Pay 3% Host Trust Fund
The House of Representatives has resolved to investigate alleged failure of oil companies to release 3 per cent of their annual operating expenditures to Host Communities Development Trust Fund (HCDTF).
The resolution was a sequel to the adoption of a motion sponsored by Rep. Hart Godwin at plenary on Wednesday in Abuja.
Moving the motion, Godwin said that in 2021, the Petroleum Industry Act, (PIA) was enacted to provide legal governance, regulatory and fiscal frameworks for the Nigerian Petroleum Industry and the development of host communities.
He said that Section 235 subsection (1) of the PIA, makes it mandatory for every licensee or lessee (settlor) whose area of operations is located in or appurtenant to any community to incorporate the Host Communities Development Trust Fund (HCDTF) for the benefit of the host community.
The rep said that Section 236 also stipulates that HCDTF shall be incorporated within 12 months from the effective date for an existing oil mining lease.
Godwin said that Section 240 subsection (2) of the Act provides that each settlor shall make an annual contribution to the applicable HCDTF of an amount equal to 5 per cent of its actual annual operating expenditure of the preceding financial year in the upstream petroleum operations affecting the host communities for which the applicable HCDTF was established.
“Some oil companies violate the provisions of Section 236 of the PIA by failing to incorporate the HCDTF in their areas of operations within the period stipulated in the Act.
“Others have bluntly refused to incorporate Host Communities Development Trust Fund as required by the law as at when due.
“Concerned that most Oil Companies failed to fund the HCDTF as incorporated and have not been able to pay the 3 per cent of the actual annual operating expenditures to the Host Communities Trust Fund in the areas of operation;
“The failure to fund the HCDTF has hampered the development of the host communities where the Companies operate;
“Cognizant of the provision of Section 297 Subsection (1) of the PIA, which makes a breach of the Act punishable with the payment of administrative penalties per day and for continuous breach and Section 238 makes failure to incorporate a HCDTF, a ground for the revocation of a holder’s license or lease,” he said.
The house mandates the Committee on Host Communities to probe the matter and report within four weeks for further legislative action.
In a related development, the house also resolved to investigate alleged non-reporting and non-remittance of Equity Liquefied Natural Gas (LNG) to NNPC Limited.
The resolution was sequel to the adoption of a motion by Rep. Nnamdi Ezechi (PDP-Delta) at plenary on Wednesday.
Moving the motion, Ezechi said that the Nigeria Liquefied Natural Gas Limited (NLNG) was incorporated in 1989 as a joint venture between the Nigerian National Petroleum Company (NNPC Limited), Shell, TotalEnergies and Eni, with NNPC Limited holding the largest equity share of 49 per cent.
He said that the NNPC LNG Limited was incorporated in 2012 in the Cayman Island as a subsidiary of NNPC Limited to manage the sale of Liquefied Natural Gas (LNG) on behalf of the group.
According to him, the financial transactions, statements and operations of NNPC LNG Limited in the Caymans have not been transparently reported to either NNPC Limited or LNG.
The lawmaker alleged that it resulted in potential non-remittance of dividends, taxes, and other statutory payments due to the Federal Government of Nigeria.
“Certain deductions are allegedly being made from NLNG proceeds, including from the sale of Liquefied Natural Gas known as Equity LNG, without the formal notification, disclosure or approval of the Federal Government.
“This is raising serious concerns of financial impropriety and potential loss of national revenue,” he said
The house mandated its Committee on Gas Resources to investigate the operations, financial reporting, and remittances of NNPC LNG Limited with respect to NLNG and report within four weeks for further legislative action. Lagos Opens N200 billion Bond for Investors Subscriptions
