DESPITE the controversy that has trailed the allocation of three percent to host communities in the just passed Petroleum Industry Bill, PIB, by the two chambers of the National Assembly, the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has said that the three percent of operating expenditure is a good starting point.
The association also said that it has never opposed deregulation as a policy but insisted that it will not support a deregulation policy that is hinged on importation.
Speaking to journalists on the sidelines of the maiden edition of PENGASSAN Security Awareness Campaign in Abuja, National President of the association, Comrade Festus Osifo, said that allocation of about five percent for the host communities would have been better, but it was good that there was a starting point.
Fielding question on the position of PENGASSAN on the three percent to the host communities in the PIB, he said:
“When people speak about percentage, they forget to talk about the basics. The question to ask is: three per cent of what? For example, if it is three per cent of profit, it is different from three per cent of the Capital Cost (CAPEX) and different from Operational Cost (OPEX).
“So, if it is three per cent of profit, it means that any year there is no profit, it means there will be no three per cent. But in this case, the National Assembly is talking about three per cent of operating expenditure.
” That means the three per cent is relatively constant. So, judging (from) where we are coming from, is the three per cent okay? To me, the National Assembly could have done better to a minimum of five per cent, but looking at where we are coming from, it was zero per cent before now, now it is at three per cent.
“For us in PENGASSAN, three per cent of operating expenditure is a good place to start. Let the bill be signed to end the uncertainty that shrouded the petroleum industry.
” The host communities can then seek amendment. In my rough estimation gotten from the expenditure of the oil companies in the last one year, three per cent translates to about $45 million. The most important thing is how the fund will be administered?
” How will the fund be applied in such a way that will serve the purpose it is meant for? Corruption must not be allowed to find its way into the administration of the fund so that the host communities will benefit maximally.”
On the call in some quarters for the outright sell of the refineries instead of the rehabilitation embarked upon by the Federal Government, Osifo said,” PENGASSAN has never advocated for the refineries to be sold. What we have always advocated for is that there should be a Public-Private partnership in such a way that government will not be involved in the day-to-day running of the refineries.
“Why is the Federal Government not exploring the possibility of adopting the LNG model where government holds minority 49 per cent while the private sector will take 51 per cent?
” That model has worked very well. PENGASSAN welcomes the rehabilitation of the refineries.
” Our advocacy once the rehabilitation work is complete will be to call on government to divest from the refineries and allow private sector to run all of them. If we were to sell the refineries the way they are, they will be sold as scraps. If government fix the refineries and then divest, the money that government will get will be reasonable.”
He disclosed that while PENGASSAN has never opposed deregulation as a policy, it will not support a deregulation policy that is hinged on importation.
He said,” That is why our position to support the rehabilitation of the refineries is justified. Nigeria will be ripe for a full deregulation when the three refineries in the country are fully rehabilitated and are functioning under the private sector that is efficient.
“With the refineries coming on stream in the next few months and with the Dangote refinery coming on board as well, Nigeria will soon be self-sufficient in refined petroleum products.”
