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Government votes N94.5bn yearly payout to oil communities

By Oscarline Onwuemenyi

ABUJA—May 28, 2010


SPECIAL Adviser to the President on Petroleum Matters, Dr. Emmanuel Egbogah, yesterday, said that the 10 per cent ‘compensation’ to be paid to oil and gas producing communities in the Niger Delta would be paid directly to the citizens.

He said the annual compensation to be paid out to the 187 communities would amount to more than $630 million, adding that government was working on a plan to ensure that only people of voting age, 18 years and above were entitled to the payment.


Egbogah who said the Federal Government was ready to begin payment of the compensation fund “as early as November this year,” added: “In fact, our calculation has always been that the programme can be implemented starting from this year. So, it is still possible.”


The special adviser who spoke at a conference on Fueling the World – Failing the Region? New Challenges for Global Energy Security, Resource Governance and Development in the Gulf of Guinea, organized by the Friedrich Ebert Stiftung organization, said the government would encourage the communities to form cooperatives or trust funds to effectively manage the massive funds.


Allaying concerns that the fund might go the way of the 13 percent Derivation Fund paid to oil producing states, which was received by the governors on behalf of the states, Egbogah noted: “This money shall be paid directly to the communities or, hopefully through Trust Funds or cooperative groups that shall be set up by the communities themselves, to do whatever they want to do with it. And I can assure you that no governor or local government council would smell this money. “If the governors had managed well the 13 percent they receive every month, the states would not be in the conditions they are today.”


The special adviser noted that the proposal was based on the payment of 10 percent of the impact value of the acreage and assets used for petroleum operations in Nigeria, as dividends to the host and impacted communities by the licensees, lessees and commercial licenses.


Guaranteed rate of return


Stressing that each member of the community could earn between N4 million and N17 million annually, Egbogah said: “The dividends are expected to provide a guaranteed rate of return of 10 per cent per year on the 10 percent of the impact value and as a consequence, the community shall receive one percent of the impact value allocated to such community per year.”


According to Egbogah, the assets involved are assets and acreage in the existing and future joint venture operations, production sharing contracts, service contracts for both onshore and offshore continental shelf. He said: “We are all aware of the recent events in the Niger Delta where there has been sustained violent agitation for increased control and participation in the exploitation of the hydrocarbon resources by the indigenes.


“This agitation has not only disrupted Nigeria’s oil and gas production and export, but also impacted on the lives and the livelihood of the local communities, with the attendant economic, social and environmental consequences.” He said that it was in the backdrop of this situation that the government came up with the proposal to give “host and impacted communities a stake in the ownership and sharing of the benefits of petroleum assets.”



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