FG Offers $600m Dividend to Oil Communities

The Federal Government has said oil-producing communities will earn about N1.1 billion as annual dividend payments from oil revenues as part of incentives in the much-anticipated Petroleum Industry Bill (PIB) which is expected to be passed by the National Assembly by Thursday, next week.

This is intended to end the perennial crisis and violence in the Niger Delta region.
It said that the payment, which would come in the form of 10 per cent equity participation and one per cent of the total asset value in the oil-producing communities and other directly impacted communities respectively, is in the PIB to protect oil and gas facilities that are located in the area.

Disclosing the plans Tuesday in her presentation at the ongoing Nigeria Oil and Gas Conference 2011 (NOG11) in Abuja, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, stated that the Federal Government remained committed to ensuring lasting peace in the Niger Delta and that the dividends would be in the form of direct payments to the oil-bearing communities.

“Direct payments of dividends to oil-producing communities will be established to address the Niger Delta crisis. Over $600 million is estimated as annual dividend payments to the communities hosting oil and gas producing facilities or directly impacted by the operation,” said the minister in the address read on her behalf by the Presidential Adviser on Petroleum, Dr. Emmanuel Egboga.
With the reduction in violence in the Niger Delta, Alison-Madueke said Africa’s top energy producer was on course to increasing her crude oil reserves to 40 billion barrels “and maintain this through to 2020” from the current level of 37.2 billion barrels.

She sought to reassure Nigeria’s foreign oil partners that the PIB, intended to radically transform the country’s oil sector, was to remedy regulatory and operational challenges and provide “robust transparency framework” in line with global practices.

The minister said that Nigeria was not unmindful that delay in the passage of the bill had put a lot of investment decisions on hold, but said the law would soon be passed.

Egboga had also in a separate session said the 10 per cent equity participation as well as the one per cent total asset value dividends would be administered based on a trust mechanism to ensure that the benefits were equitably conveyed to the impacted communities.

He said the expected annual dividend payment was different from the 13 per cent derivation fund that was accrued to oil-producing states.

According to him, the total compensation sum is a summation of the value of the assets and expected revenue from the industry when the PIB becomes a law.

Meanwhile, THISDAY has learnt that the PIB, which is before the National Assembly, may be passed into law by the Thursday, next week.

“The PIB is likely going to be passed next week,” Lee Maeba, Chairman of Senate Committee on Petroleum (Upstream) told THISDAY.
“Final work on the bill is in top gear and hopefully it will be passed next week,” said Maeba, who has been more closely related with deliberations on the piece of legislation.

The PIB will re-write Nigeria’s decades-old relationship with its foreign oil partners, altering everything from the fiscal framework for offshore oil projects to the involvement of indigenous firms in the sector.

Sources also disclosed that barring any last minute change of mind by the parliamentarians, the bill will likely go through its final debate on the floors of the two chambers of the National Assembly between Tuesday and Wednesday next week before its expected passage on Thursday.

Last-minute finishing touches to ensure its smooth sail is ongoing while the two contentious issues of high taxation and harmonisation by both the upper and lower chambers have been resolved, paving the way for its passage.
A source also disclosed that the bill was expected to have been passed on February 8.

International oil companies such as Royal Dutch Shell, Exxon Mobil, Total and Chevron, which account for over 90 per cent of Nigeria’s oil output for decades, are worried the bill will impose higher taxes and royalties while failing to address key issues of under-funding, corruption and security.

For instance, the Managing Director of Chevron Nigeria Limited, Mr. Andrew Fawthrop, said at the same event that while over $40 billion in investment was required to develop new fields in Nigeria’s deepwater region, the government would need to put in place favourable fiscal terms and stable policies to woo investors.

Fawthrop said that there had been a steady decline in drillings in Nigeria’s deepwater fields since 2004 with only two exploration wells drilled in 2010.

-Punch

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Posted by admin on Feb 22 2011. Filed under Niger Delta, Top Stories. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry