Following criticism by Niger Delta leaders of the three percent annual allocation to host communities of the region from the operator’s operating expenditure, the Group Managing Director of Nigerian National Petroleum Corporation, NNPC, Mele Kyari on Tuesday explained that the three percent allocation of the oil companies operating expense to host communities was higher than 30 per cent of profit oil and gas for frontier exploration.
They leaders had posited that the percentage is “meagre portion” compared to the level of environmental degradation and development in the region.
However, Kyari who spoke on NTA interview programme monitored by ASHENEWS, said although the allocation for the communities has a low percentage, the percentage has bigger value.
“For instance, when you say 30 per cent profit oil and gas from NNPC shares or from PSC, it is a very small number. The percentages appear very outrageous but 30 per cent of what? Nobody has sat down to look at it. When you say profit oil 30 per cent, it probably comes down to less than $400 million per annum.
“But when you come to the host communities, you have three per cent of our operating expense. We spent about $16 billion in fiscal 2020 in our operating expense across the industry. So, when you take three per cent of that number, it comes to $500 million, which is far above the budget of NDDC.
“You can see that those percentages don’t reflect the realities that we are trying to achieve by this. And for profit oil, there are lots of uncertainties around it because if you don’t make profit it is zero but you must spend money to do operating expense.
“We are very sure that the provisions that are meant for host communities will be implemented and delivered,” Kyari said.
According to him, the PIA will “proffer lots of prosperity for our country” in both short and long terms, adding that there would be no difficulties implementing the new law.
Kyari further explained that the host community fund was completely within the control of the host communities.
“It is not a fund that will be managed by oil companies,” he said.
