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Experts differ on oil bearing, pipeline communities’ classification

Uzodinma Nwogu

As the controversies over the recently passed, Petroleum Industry Bill (PIB) rage, some experts have again differed on the classification of both pipelines and oil-bearing areas as host communities in the distribution of the three percent industry revenue approved in the Bill.

In separate interviews with Sustainable Economy the experts argued over the aspect of the PIB, which allows three per cent revenue to be enjoyed in areas where pipelines passed through or oil producing communities.

While a former Deputy Director, Department of Petroleum Resources (DPR), Sunday Babalola, believes it is morally wrong and could be counter-productive, to classify both areas as host communities, the National Deputy President, Independent Petroleum Marketers Association of Nigeria (IPMAN), Debo Ahmed, sees nothing wrong with it.

In his opinion, Babalola insists that equating oil producing/bearing with the pipelines areas as host communities of oil companies, amounts to injustice, adding that such a development is capable of provoking restiveness among them.

Against this backdrop, Babalola, a Director at All Grace Energy, warned that resumption of restiveness in the oil-rich Niger Delta, at this point in time will negatively impact Nigeria’s economy and foreign exchange earnings. 

He, therefore, urged President Muhammadu Buhari to withhold his assent to the PIB, until this provision is reviewed to avoid resumption of hostilities against oil companies.

He counselled that concerted efforts must be made to prevent Nigeria’s economy from having another shock and revenue disruption, which will compound current insecurity challenges including terrorism, banditry, kidnapping, cattle rustling and herders’/farmers clashes.

Babalola said: “The PIB is good, but it has its own flaws though. There are some aspects of it that are good and there are some aspects that need to be reviewed. It is good because it gives some communities some percentage of the oil revenue.

“The way it is now, the whole country is an oil producing community because if the pipelines pass any community, it has become an oil producing community. My opinion is that it is not. The oil producing communities are the ones that are really and sincerely impacted by oil and gas production activities.

“One of the ways is to give the host communities some percentage of the revenue, which the PIB is addressing, but when you make everywhere the oil pipeline passes a host community, it becomes very laughable. When you give host communities some percentage that is why people sign General Memoranda of Understanding with host communities, and they are able to use it to develop the host communities. The host communities that are enjoying it are those that ensure monitoring and security of these facilities because they know that any disruption will also disrupt their lives.”

The way it is now, the whole country is an oil producing community because if the pipelines pass any community, it has become an oil producing community. My opinion is that it is not. The oil producing communities are the ones that are really and sincerely impacted by oil and gas production activities.

But arguing in favour of communities where oil pipelines pass through to also enjoy the three per cent allocation, Ahmed said such a move will check pipeline vandalism, environmental degradation and disruption of intra socio-economic activities.

He noted that the PIB retained the 13 per cent derivation for the oil bearing communities, and they will also benefit from an additional three per cent to further protect their interests.

Ahmed said: “There are a lot of concerns and a lot of things are to come out of the PIB. Even before now, there was a 13 per cent derivation. If there is an additional three per cent, it is a lot of money and encouragement. The government did not say that derivation is no longer tenable, so if another three per cent is added, and those that pipelines passed through their communities are included, there is nothing wrong with it. Those that have pipelines passing through their areas can also have pipelines burst and many areas could be polluted, so the three percent should not bring another crisis.”

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