By Eddie Wikina
Right from the very day it was announced, most of us industry watchers raised concerns. I believe we all agree and accept all the emotional outbursts of people from the Niger Delta, regarding two main areas:
1. The 3% allocation to the Community trust fund.
2. The new definition of host communities that now include pipeline transverse communities.
There are still some matters arising from the above,that need better clarity and definition to meet the desire and expectations of the Niger Delta to erase or reduce their concerns. For example, I would argue that the initial proposed 10% allocation should continue to be demanded. And the % should be tied to the overall company budget. If to OPEX, 10%, and if to total budget 5%. This should be the debating options to be presented.
There are also issues with management and control of the Trust Fund. A structure that gives full control to each host community, just like we have with the Shell GMOUs, but with some oversight of the state government is recommended. Once bill is passed into law, it should be left to the operating company and host community to define their best operational relationships, and federal stay out completely.
With regards to the 30% allocation for frontier fields development, it needs to be clear where the source of the funds will emanate. If from federal sources funded by proceeds from oil production in the Niger Delta, the section in the bill should be rejected and scrapped. If however to be funded by the new NNPC Ltd operating as an independent commercial entity, they are free to spend their money as their board allows and approves. In other words, NNPC Ltd will invest and make profits like any other independent or international oil companies. NNPC Ltd will not continue with the funding mechanism of present NNPC, where they do little work and collect money from operations carried out by other companies. Consequently, the new NNPC Ltd can allocate what they want to frontier fields in any part of the country. But they cannot use funds generated in the Niger Delta basin to waste on wild exploration in dry regions known not to bear any hydrocarbon deposits.
On the general fiscal side, I believe the context of the bill meets the yearnings of operators, as the clauses offer clarity on areas that have been contentious for long. This therefore will allow them operate more openly and indeed encourage inflow of needed foreign investment into the sector.