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Mele Kyari: Host communities to get $500m annually from PIA

Mele Kyari: Host communities to get $500m annually from PIA
August 17
10:39 2021

Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), says host communities of oil companies in the Niger Delta could get $500 million annually from the new Petroleum Industry Act (PIA).

On Monday, President Muhammadu Buhari signed the PIB into law in what was described as his determination to fulfill his constitutional duty.

A contentious issue in the bill is the allocation of 3 percent oil companies’ operating expenses for host communities — a percentage tagged as insufficient by some stakeholders.

Several stakeholders including Seriake Dickson, senator representing Bayelsa west; Douye Diri, governor of Bayelsa state; Edwin Clark, an Ijaw national leader, have argued that three percent is unacceptable


But in an interview on Arise TV, Kyari said the percentage is sufficient as it could be bigger than the current share allocated to the Niger Delta Development Commission (NDDC).

The NNPC GMD said $16 billion was recorded as the total operating expenses by the oil and gas sector in the previous year, saying three percent of such figure is around $500 million.

“And three per cent of your operating expenditure is a huge number. Many people argue around whether it should be 10 per cent or five per cent or three per cent. But percentage of what? I think that’s what most people don’t understand today,” he said.


“Last year’s operating expenses for the year was about $16 billion. Three per cent of $16 billion is a large number, somewhere around $500 million plus. That’s because in today’s context, it is probably bigger than the NDDC. That’s really what it is. That’s what you’re providing.”

Kyari said the signed bill, now known as the Petroleum Industry Act, will ensure that the NNPC operates under the Company and Allied Matters Act (CAMA) as a new company.

He said the NNPC would become slimmer, more efficient, and operate effectively as a commercial national oil company.

The NNPC GMD assured that plans are ongoing to transit assets and other resources to the newly established company within six months.


“The meaning of this is that this company will just be another privately-owned company in a sense, this company will pay taxes, this company will pay royalties, and this company will deliver dividend to its shareholders. This isn’t the situation today, because the corporation has no such obligation today,” he added.

“What this bill will do now is that in the very short term, within the framework of the petroleum industry act, within six months a new company will be incorporated. That means all liabilities and assets of this company will be transferred to the new company, not all of them.

“By the way, the bill is also very clear that some toxic assets of the corporation would no longer would be with the corporation, but the shareholders can decide to keep some of the assets and leave some within the corporation.

“The PIB did envisage that we’re going to have a market regulated petroleum market regime. And by the way, I’m sure you’re aware that only petroleum is regulated today. And every other petroleum product prices are determined by the market. And therefore the only one element that is not resolved today is petrol.”



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