The Federal Government of Nigeria revealed on Wednesday that the country’s oil production is presently below its technical capacity by roughly one million barrels per day.
The government cited various issues, including insufficient investments, insecurity, and a decrease in funding for hydrocarbons due to the energy transition, among other things, as the reasons for the low oil output.
The Nigerian Upstream Petroleum Regulatory Commission made this information public at a workshop held in Abuja, themed, “The Implementation of The Host Communities Development Trust” which aimed to inform host communities about the implementation of the Host Communities Development Trust.
Speaking about the setback the Chief Executive officer of NUPRC, Gbenga Komolafe, stated, “While the commission is prioritising efforts towards increasing oil and gas production and ensuring maximum federation revenue through the optimisation of oil and gas value chain, the efforts have been constrained by a myriad of challenges.
“These challenges range from insecurity, low investment, and de-prioritisation of funding of hydrocarbon development arising from the energy transition. Currently, Nigeria has the technical allowable capacity to produce about 2.5 million barrels of oil per day. However, arising from the highlighted challenges, our current production hovers around 1.5 million barrels of oil and condensate per day.”
The Commissioner for Economy, Regulatory and Strategic Planning at NUPRC, Kelechi Ofoegbu, who represented Komolafe said the workshop’s objective is to raise awareness and facilitate knowledge exchange regarding the implementation of the host community provisions in the Petroleum Industry Act of 2021.
Ofoegbu further stated that the implementation of these provisions would be done in a way that would have a favourable impact on the inhabitants of the Niger Delta region and other communities that host oil and gas operations.
“Our objective in this workshop is to create further awareness of this very important piece of legislation and provide updates on the commission’s activities geared towards the implementation of the regulations for Nigeria’s oil and gas industry.
“It is to provide a clear roadmap for the implementation of the Host Communities Development Trust to enhance peaceful and harmonious co-existence between oil and gas industry operators and host communities, and ultimately support the development of host communities,” the NUPRC leader stated.
“One critical milestone under the PIA is the incorporation of Host Communities Development Trust by the settlor provided for in Section 235 as well appointment of Board of Trustees by the settlor in consultation with the host communities. The settlers are the oil and gas companies operating within host communities.
“Section 240 (2) of the PIA stipulates that each settlor, where applicable through the operator, shall make an annual contribution to the applicable host communities development trust fund of an amount equal to three per cent of its actual annual operating expenses of the preceding financial year in the upstream petroleum operations affecting the host communities for which the applicable host community’s development trust fund was established.
“In addition, Section 247 of the Act requires the Board of Trustees to set up a management committee which shall be responsible for the general administration of the Host Communities Development Trust Fund,” Komolafe explained.
Komolafe informed the chiefs of host communities and other participants at the workshop that the Nigerian Upstream Petroleum Regulatory Commission has approved 75 Host Community Development Trusts, and 41 of these trusts have been fully incorporated by the Corporate Affairs Commission.
Furthermore, the NUPRC has pre-qualified 19 fund managers and initiated the process of establishing a baseline of ongoing community development projects to ensure their migration into the Host Community Development Trusts.
Additionally, in partnership with an Original Equipment Manufacturer, the NUPRC has developed a digital automated platform for reporting and monitoring the Host Community Development Trusts for transparent administration of the HostCom provisions of the PIA.
According to Komolafe, the portal is designed to meet the specific requirements of the Host Community Development Trusts enshrined in the PIA. The platform will aid all stakeholders, including the settlors, Board of Trustees, management committees, advisory committees, and fund managers, in fulfilling their obligations to host communities and promoting accountability and transparency in the management of the Host Community Development Trusts programme.
“The portal will also enable quick feedback from the stakeholders and the public for the commission to carry out its regulatory oversight effectively,” the NUPRC leader stated.
