Nigeria: Experts Blame Govs, NDDC for Oil Host Communities' Underdevelopment

28 July 2021

As the controversy surrounding the provision of only three per cent of oil companies"s expenditure as funding for oil bearing communities in the Petroleum Industry Bill rages, energy experts have blamed state governors in the region and the Niger Delta Development Commission, NDDC, for the lack of development in the communities.

They also blamed poor performance by the Ministry of Niger Delta Affairs for the challenges in the region.

Speaking to Vanguard, yesterday, in Abuja on the sidelines of the ongoing 14th annual conference of the Nigerian Association of Energy Economics, NAEE, immediate past President NAEE, Prof Wumi Iledare urged oil bearing communities to hold their state governors responsible for the underdevelopment of the areas.

Iledare who is the current GNPC Petroleum Commerce Chair in Oil and Gas Studies, University of Cape Coast, Ghana, said the 13 percent derivation, NDDC and Ministry of Niger Delta Affair revenue allocations were all meant for the development of oil host communities

He explained: "I think the host communities are not being fair to themselves. If they are fair to themselves, they will hold their state governors responsible for not developing their communities. The NDDC is meant for the host communities, the derivation fund is meant for the host communities, the Ministry of Niger Delta is meant for the host communities.

Hold the governors responsible."You are leaving the people that are stopping the development of host communities alone and you are blaming somebody else. The money for the development of host communities is given to the oil producing region on an annual basis significantly, including the state budget. That is what should be surrendered to them and it begins with the state assembly".

On the agitation by some sections of the host communities for 10 percent equity, Iledare stated: "It is stochastic because if you have equity in a business the only thing you get is dividend. And dividend depends on retained earnings. No profit, no dividend and what determines profit is the cost.

"And at the end of the year, the companies can decide to retain a significant portion of their earnings. If you are a shareholder, and they carry you because you have equity and you don't put money down, that means the cost they incur for carrying you must be developed. Three percent is better than nothing", he added.

On her part, the President of NAEE, Prof. Yinka Omorogbe noted that three percent provisions remained a good deal, observing that controversial sections could be amended in the future.

According to her, not having the PIB or further delay in its passage and assent was not an option given the dynamics of the oil and gas industry.

She said: "My opinion is premised on the fact that there is no alternative to a total reform of the Nigerian oil industry, if Nigeria is ever to realise its full potential. There has never been. Every draft of the PIB has been controversial.

"In fact, controversies surrounding it are the reasons that the process has dragged on for so long, and in the meantime, the nation has suffered, with dwindling investments in Nigeria, particularly in the Nigerian oil and gas sector. However, the world is not waiting for Nigeria and can actually do without Nigerian crude".

Omorogbe observed that, "As the nation debates the Bill, it is necessary to focus on its actual contents and not on interpretations that are not always supported by fact. It is important for those who can, to come out with actual numbers and eschew the present discussions on percentages, based on the perception that they refer to the same thing when in fact they do not. Daily we hear about three per cent as against 30 per cent".

She stressed that the funding process for new frontier basins and for host communities was significantly different with the host communities funding almost equating what is currently obtainable.

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