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PIB passage: Uproar as Senate slashes host community share to 3% of oil profit

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Senate

As the Senate passed the much desired Petroleum Industry Bill (PIB) on Thursday thirty per cent of profits accruing from oil and gas operations by the Nigeria National Petroleum Corporation (NNPC) is now to be set aside for exploration of oil in the frontier basin.

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And all exploration of frontier basins shall fall under the purview of the Upstream Regulatory Commission.

Similarly, three per cent has been reserved for the development of host communities.

But before the Senate reached these decisions, the plenary was rowdy particularly because of disagreements on the right percentage of oil revenue for host community.

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The report of the Senate Joint Committee on Petroleum which processed the bill had proposed five percent for host communities.

But when the Senate began clause by clause consideration of the bill, it was reduced to three per cent.

The decision caused moment of stalemate as Senators from Niger Delta region rose against it.

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Senator James Manager (Delta State), proposed an amendment to retain the provision of five percent in the report but he was defeated.

As Senate President Ahmad Lawan hit the gavel to re-confirm the three percent host community provision, Senator George Sekibo ((River State) called for a division.

His motion challenged the ruling of the Senate President and the Senate floor became tensed.

Fearing the consequences of embarking on a division, the Senate leadership swiftly resorted to pleading with Sekibo to withdraw his motion.

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Senate leader, Yahaya Abdullahi, said the Senate would be heading to the state of armageddom if it allowed that division to happen.

Lawan also supported the Senate leader and preached the gospel of patriotism to Sekibo who later agreed and withdrew his motion.

Chairman of the senate Joint Committee that processed the bill, Sabo Muhammed Nakudu, (APC, Jigawa West) while presenting the report explained that “the Joint Committee’s recommendation recognizes the need for the country to urgently and aggressively explore and develop the country’s Frontier Basins to take advantage of the foreseeable threats to the funding of fossil fuel projects across the world due to speedy shift from fossil fuel-to other alternative energy sources.”

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“To this end, the Committee recommends funding mechanism of thirty percent (30%) of NNPC Limited’s profit oil and profit gas as in the production sharing, profit sharing, and risk service contracts to fund exploration of frontier basins,” Nakudu explained.

On the initial recommendation of five percent for host communities, the committee said it is aimed at ensuring adequate development of the host communities and reduction in the cost of production.

“Accordingly, the Joint Committee recommends five percent (5%) of the actual annual operating expenditure of the preceding financial year in the upstream petroleum operations affecting the host communities for funding of the Host Communities Trust Fund.”

The report also stated that a Host Community Trust Fund, which is to be anchored by the oil and gas companies operating in the host communities, has been created.

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