House of Representatives in session
The House of Representatives has launched an investigation into allegations that several oil companies have failed to remit the required three per cent of their annual operating expenditure to the Host Communities Development Trust Fund (HCDTF), as mandated by law.
This followed the adoption of a motion sponsored by Rep. Hart Godwin during plenary on Wednesday in Abuja.
Presenting the motion, Godwin recalled that the Petroleum Industry Act (PIA), enacted in 2021, was designed to ensure better governance, transparency, and equitable development of host communities affected by oil and gas operations.
He explained that Section 235 (1) of the PIA compels every licensee or lessee, referred to as a settlor, whose area of operation is located within or near a host community, to establish the Host Communities Development Trust Fund for the benefit of that community.
According to him, Section 236 further stipulates that such trusts must be incorporated within 12 months from the effective date of an existing oil mining lease, while Section 240 (2) requires that each settlor contribute 3 per cent of its actual annual operating expenditure from the preceding year to the HCDTF.
> “Some oil companies violate the provisions of Section 236 of the PIA by failing to incorporate the HCDTF in their areas of operations within the period stipulated in the Act,” Godwin said.
“Others have bluntly refused to incorporate Host Communities Development Trust Fund as required by the law as at when due.”
The lawmaker expressed concern that many oil companies had either neglected or failed to fund the HCDTF as expected, depriving host communities of vital development projects.
> “The failure to fund the HCDTF has hampered the development of the host communities where the companies operate,” he added.
Godwin reminded his colleagues that Section 297 (1) of the PIA prescribes administrative penalties for continuous breaches, while Section 238 provides that failure to establish the HCDTF could lead to revocation of the company’s operating license or lease.
Following deliberations, the House directed its Committee on Host Communities to carry out a comprehensive investigation into the matter and present a report within four weeks for further legislative action.
Reps Also Probe NNPC Over Alleged Non-Remittance of LNG Proceeds
In a separate development, the House of Representatives has also resolved to investigate alleged non-reporting and non-remittance of Equity Liquefied Natural Gas (LNG) revenues by the Nigerian National Petroleum Company (NNPC) Limited.
The decision came after lawmakers adopted a motion moved by Rep. Nnamdi Ezechi (PDP–Delta) during the same plenary session.
Ezechi explained that the Nigeria Liquefied Natural Gas (NLNG) Limited was established in 1989 as a joint venture between NNPC Limited, Shell, TotalEnergies, and Eni — with NNPC holding the largest equity share of 49 per cent.
He noted that the NNPC LNG Limited, incorporated in 2012 in the Cayman Islands, was created as a subsidiary to manage LNG sales on behalf of the NNPC group. However, he alleged that its operations and financial transactions have not been transparently reported to either NNPC Limited or NLNG.
According to Ezechi, this lack of transparency may have led to non-remittance of dividends, taxes, and other statutory payments due to the Federal Government.
> “Certain deductions are allegedly being made from NLNG proceeds, including from the sale of Liquefied Natural Gas known as Equity LNG, without the formal notification, disclosure or approval of the Federal Government,” he said.
“This is raising serious concerns of financial impropriety and potential loss of national revenue.”
The House subsequently mandated its Committee on Gas Resources to investigate the financial reporting and remittance practices of NNPC LNG Limited in relation to NLNG operations and to report back within four weeks.
NAN
