OrderPaperToday – The Federal Government has stated that the 2.5 per cent proposal to host community development trust fund is fair.

The Minister of State for Petroleum Resources, Timipre Sylva, made this known at the second day of the public hearing on the Petroleum Industry Bill (PIB) on Tuesday.

This is despite opposition from host communities for the percentage of operating cost to be put at 10 per cent as contained in the PIB of 2008.

The President, National Executive of the Host Communities of Nigeria Producing Oil and Gas (HOSTCOM), High Chief Benjamin Tamaranebi, who spoke with journalists earlier, noted that the reduction to 2.5 per cent would deny the people the required funds to develop their areas.

He said: “Previous assemblies made it 10 percent, then it was reduced by 50 per cent to five per cent and now, it has been reduced by 50 per cent again to 2.5 per cent. If this bill is not passed again, they might reduce it to 1.25 per cent.

“We as host communities have stood to say we will accept nothing less that 10 per cent equity share be given to host communities for us to have a sense of belonging and treat the assets as out own, not thier own – which will do good to the nation and oil companies.”

But Sylva, who also addressed journalists, said the proposal is fair adding that the host communities are focusing on the percentage from the profit of 2.5 of oil companies instead of their operating cost.

He explained: “The 2.5 per cent that was proposed in the bill is fair. I speak advisably as a member of the host community myself.

“If you have to look at it properly, you will see that 10 per cent of profit is different from 10 per cent of the OPEX (Operating Expenditure). Before now, you had the provision of 10 per cent of profit and profit means that if I don’t declare it, you don’t have anything. I can decide to say 100 per cent of profit and not declare any profit, so you don’t get anything.

“But in this case, it’s 2.5 per cent of the OPEX. So, at the end of the year, you look at your operating cost and take 2.5 per cent of that cost to the budget of the next year.
These are just proposals before the National Assembly and until it is passed before we can talk about it.

“…As far as we are concerned, we have made a very fair proposal. Fair to the host communities, to the country and to the companies. And we have put this bill before the National Assembly and hope they pass it the way they see fit.”

Recall that in October 2020, the Deputy Senate President, Ovie Omo-Agege (APC, Delta Central) assured the people of Niger Delta region that the annual contribution of 2.5 per cent actual operating cost by oil companies to the Host Community Development Trust Fund would be increased to, at least, 5 per cent.

Read details of host communities provisions of the PIB here.


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