PIA: 3% for host communities, 30% frontier exploration fund will deplete federation account, says Fayemi

Kayode Fayemi, governor of Ekiti state, says the 30 percent allocation from Nigerian National Petroleum Corporation (NNPC) profit oil and gas for frontier exploration and three percent of operating expenditure of oil companies for host communities in the Petroleum Industry Act (PIA) will further deplete accruals to the federation account.

On Wednesday, President Muhammadu Buhari appointed Timipre Sylva, minister of state for petroleum resources, as head of the PIA implementation committee.

It followed the signing of the Petroleum Industry Bill (PIB) into law on Monday.

While many described the assent by Buhari as a right step, some leaders in the Niger Delta have criticised the 3 percent annual allocation to host communities from the operator’s operating expenditure.

They described it as a “meagre portion” compared to the level of environmental degradation and development in the region – some even frowned at 30 percent allocation for the search of oil and its discovery.

Suraj Oyewale, an energy expert, shed some light on the grey areas in the new PIA.

But speaking on Thursday, during an interview with Arise Television, Fayemi, who is also the chairman of the Nigeria Governors’ Forum (NGF), said his counterparts were prepared to work with the committee, but concerns regarding adherence to the constitution raised by the governors must be looked into.

The governor said the forum would explore all available options before seeking legal interpretation.

He said Sylva had reached out to the forum to say that their concerns would be addressed as an amendment to the new petroleum law.

“It is not everything that we have to resort to court to resolve. We only do that when all options have been exhausted and we haven’t secured a reprieve,” Fayemi said.

“In this particular instance, we will work with the implementation committee. And if there is any reason for us to take an alternative measure, we will cross that bridge when we get to that.

“But at least it has been acknowledged that these issues can be resolved, in some way, shape or form, as we are proposing. We will wait and see before we take any further steps.”

Fayemi further criticised the 30 percent frontier basin exploration fund in the PIA which he said would deplete accruals to the federation account.

“This is a matter that the entire forum has discussed extensively, and we have come to certain conclusions about what is called frontier funds,” he said.

“Whether it is three percent or not, our concern there is that whatever you are taking into these places is a depletion of the federation account, that money will not go to the federation account, it would be spread across the few areas that you described as volunteer basis, rather than to the entire federation.

“And we worry more about the entire federation, not about selected parts of the federation. For us as governors, that is a distinction without a difference. We are talking about depletion from the federation account, whether it is three percent or 30 percent.

“It is money that should come to the federation account, that should then be subjected to fair and equitable distribution on principles of sharing, rather than one that is going to be at the whims and caprices of this new limited company.”