A ten percent equity holding in Nigeria’s oil industry is to be given to the people of the Niger Delta region in furtherance of President Umaru Yar’adua’s program of restoring peace to the restive region, the Financial Times of London [FT] and the Reuters news agency separately reported yesterday. While Reuters attributed the story to an unnamed senator, FT named its source as Yar’adua’s Adviser on Petroleum Matters Dr. Emmanuel Egbogah.
Though Reuters said a bill to effect this change has been sent to the National Assembly, House of Representatives member Ita Enang (PDP, Akwa Ibom State), who is chairman of the House Committee on Rules and Business, told Daily Trust last night that no such proposal has been sent to them.
Reuters quoted a senior lawmaker as saying Yar’adua asked the Assembly to approve the allocation of 10 percent of Nigeria’s oil and gas industry jointly to Niger Delta residents.
The equity stake, it said, is aimed at providing hundreds of millions of dollars each year to develop the restive region.
Reuters said the senator, who asked not be identified, confirmed a report by the Financial Times that the National Assembly was considering adding the initiative to the Petroleum Industry Reform Bill, which has been lying in the Assembly since early last year.
“Yes, we are considering equity participation in the oil industry by the host communities,” the senator told Reuters.
“Actually this is what the president told the governors and other stakeholders from the Niger Delta in a meeting last week.”
At present, NNPC controls the majority share in this country’s joint ventures with international oil companies, including Royal Dutch Shell, Chevron and ExxonMobil.
Under Yar’adua’s initiative, according to Reuters, Niger Delta communities would be given a10 percent stake in NNPC’s share of the ventures.
FT quoted Dr. Emmanuel Egbogah as saying Yar’Adua has backed the idea of transferring to Niger Delta communities 10 per cent stakes from the holdings of the national oil company in the joint ventures.
Mr. Egbogah said he intended to add the proposal to reforms that the government hopes to enact by the end of the year, which would also impose tougher terms on oil companies but which is currently embroiled in a tortuous debate in parliament. He also said the plan is “a serious one, a major one, something quite revolutionary.”
He said Niger Delta residents would receive this through cash benefits delivered through a trust-style mechanism which they could use individually or pool for social projects, according to FT. It said officials believe the community stakes could be worth more than 50 billion naira in the first year.
Mr. Egbogah said the 10 per cent stakes would pay dividends on revenues after taxes and costs to communities, bypassing powerful governors of the eight oil-producing states who were instead calling for an increase in the extra share of petroleum revenues they already receive. The stakes could not be resold.
Mr. Egbogah said the plan would cover “all petroleum assets in the country” but added that “obviously there are no oil-producing communities in the offshore,” which is home to major deepwater fields.
Seven onshore joint ventures between the state-owned Nigerian National Petroleum Corporation and foreign oil groups in the delta account for 70 per cent of Nigeria’s production. The NNPC holds between 55 per cent and 60 per cent in each.
The government hopes to provide a disincentive to oil-theft and sabotage by linking the earnings of each qualifying community to production from the joint venture that extracts its resources.
“These benefits will flow directly to them,” Mr. Egbogah said. “Every community, whether blind or deaf or dumb, every citizen will say: ‘I own a part of this business.”
FT also quoted Antony Goldman, head of London-based risk analysis group PM Consulting as saying the initiative could be very difficult to implement due to technical issues in deciding which communities would benefit and how much each would receive.
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