Connect with us


NUPRC threatens to revoke oil operators’ licenses for non-remittance of 3% statutory fees to oil communities



The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has issued a warning that it may cancel the licenses of oil operators or companies who do not submit the required three percent statutory fees to oil communities by the end of September.

The management of NUPRC became aware of the concerns raised by host communities in the Niger Delta region, where oil and gas are produced, regarding the delay in payments of these statutory fees by industry operators.

According to a statement signed by Mr. Gbenga Komolafe, the Chief Executive of the Commission, this three percent remittance is mandated by Section 235 of the Petroleum Industry Act (PIA) of 2021. The relevant section specifies that failure by any license holder to fulfill their obligations under this section could lead to the revocation of their license.

The statement further advised operators (settlers) under the PIA of 2021 (Section 235) who are in default to promptly meet their obligations and settle any outstanding payments without any further delay.

The Commission also emphasized that, should the situation persist without resolution by the end of September 2023, they may have no choice but to revoke the licenses of those operators who are in default, as allowed by Section 235 of the PIA of 2021.

The commission said it understood the sentiments of the host communities, especially as the PIA had suspended and replaced existing provisions with a new Host Community Development Trust Fund (HCDTF).

The old provisions are; Global Memorandum of Understanding (GMOU) and the Memorandum of Understanding (MOU).

The Commission said it was fully aware of the implications of the development if allowed to fester.

It said the agitation might frustrate the Commission’s efforts at up-scaling the drive for higher foreign exchange and attracting Foreign Direct Investment (FDI) into the country.

Incidentally, it said it was also capable of truncating efforts at stabilising the value of the Naira, attaining the much-desired rebound in the national economy and improving the country’s macro-economic status.

“The statutory provision of the PIA regarding the annual contribution of operators in the industry, under Section 240 (2) of the PIA, 2021, is very clear.

“And it states: Each settlor, where applicable through the operator, shall make an annual contribution to the applicable host communities development trust fund.

“It should be an amount equal to three 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 HCDT fund was established.

“Given the implications of allowing continued default on sustained peaceful operations and the eventual effect on national oil and gas output.

“The Commission will be minded to activate its regulatory powers in line with PIA’s provisions as stated above, to bring defaulting recalcitrant settlors into compliance,” said the statement.

The NUPRC management said it recently passed the Host Community Regulation and organised a sensitisation programme, emphasising the responsibility of settlors under the PIA, 2021, but those concerned had neglected this, thereby stoking avoidable agitations.

“The settlors are, therefore, required to perform their obligation to commence remittance of the statutory three per cent contribution,” it added.

It stated that remittance of the statutory contribution, which should have served as succour to the host communities, had sadly become a source of pain to the lawful beneficiaries.

This, it said, had given impetus to actions that might affect smooth upstream operations within affected host communities, a situation that could have been addressed through routine social inclusion.

It further said although the ultimate regulatory sanction, as enshrined in Section 238 of the PIA, was the revocation of assets, but it had been careful in applying it.

It said this was to avoid compounding the already low level of investment and divestment rate and further impact negatively on production levels and revenue.

It said, rather, it chose to draw a balance and be strategic in implementing the provisions of the law.