Rep: Why lawmakers increased frontier basin exploration fund to 30%
Uju Kingsley Chima, a lawmaker representing Ohaji-Egbema/Oguta/Oru West federal constituency, says the 30 percent allocation for oil exploration will benefit all Nigerians.
Chima, who was also a member of the ad-hoc committee on Petroleum Industry Bill (PIB), stated this on Friday during a media briefing on the bill.
Controversies emerged over 30 percent allocation to the frontier basins exploration fund from the proposed 10 percent by the two chambers.
The reduction in host community funds from the proposed 5 percent to 3 percent also caused fierce arguments during the bill’s passage at the senate.
Stakeholders had clamoured for 10 percent for oil-producing states during the public hearing of the PIB.
Speaking on the frontier basin controversy, Chima said lawmakers consulted experts and the executive before taking the final decision.
“It is a win-win approach for all stakeholders. The frontier basin is not an exclusive reserve of a part of a country. These are areas with oil prospects, they said we have about six basins.,” he said.
“Yes, we can say the bulk of the basins are domiciled in a section of the country. Let me give you what will impress you today, whatever funds made available to these basins are reserved for future explorations.
“The fund will be used for seismic operations, this involves geological analysis and to some extent, sub exploration, to convince investors that Nigeria has oil in commercial quantity in those places.
“The wish of the people of Niger Delta is, let oil be found in every community in Nigeria, if it is benefits that the people of Niger Delta are enjoying, let everyone enjoy it.”
According to the bill, NNPC Limited would pay 30 percent of its profit in the production sharing, profit sharing and risk service contracts to the frontier exploration fund.
On the 5 percent allocated to host communities by the house of representatives, the lawmaker said the fund would address some of the challenges facing oil-producing communities.
He said the fund would be sent directly to the host communities and not through proxy.
I am not sure Why Kingsley Understands what the implications. 30% of funds meant for the Federation Account will be used to take Risks.
Let him tell me which Financial Institution in the world give Loans for Exploration.
This is DANGEROUS LUNACY!
Definitely a NAIVE Decision. This will deplete the amount due Federation Account by 30%. Exploration is a Risky venture. Frontier Basins are very high Risk ventures. No Financial Institution world over grants Loan for Oil Exploration.
This a very bad decision. Instead a law with incentives for IOCs or Independents to invest in the Basins