The House of Representatives has resolved to investigate the alleged failure of oil companies to release 3 percent of their annual operating expenditures to the Host Communities Development Trust Fund (HCDTF).
This followed the adoption of a motion sponsored by Hon. Hart Godwin at Wednesday’s plenary in Abuja.
In his presentation, Godwin recalled 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 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 lawmaker added 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: “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 the 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 an HCDTF, a ground for the revocation of a holder’s license or lease.”
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.