The controversy surrounding the exclusion of payment of royalties to oil-producing communities in the Petroleum Industry Bill (PIB) is about to be resolved.  The original bill gave five per cent of the royalties to the community and 25 per cent to the states where the oil is produced.

It was, however, withdrawn and a second bill was introduced in which the host communities would not be entitled to any interest if passed.

This, along with the reported relocation of the Petroleum University from Effurun, Delta State, to Kaduna, had incurred the wrath of South-south governors who subsequently threatened to pull out of President Umaru Musa Yar’Adua’s amnesty deal for Niger Delta militants.

It emerged yesterday that the Federal Government might have bowed to pressure by oil ompanies as well as leaders of the Niger Delta region to incorporate payment of royalties to the ommunities in the bill.

Also yesterday, governors of the South-south geo-political zone pledged their support to ensure the full implementation of the amnesty for militants as proposed by the President.

This is coming as Shell Petroleum Development Company Limited (SPDC) has said that the confidence of private investors in the investment environment of Nigeria’s oil and gas sector currently is shaky.

Indication to government’s decision on royalties emerged yesterday as the Special Adviser to the President on Petroleum Matters, Dr. Emmanuel Egbogah, said in Abuja that the Federal Government would incorporate payment of royalties to the oil communities in the bill.

Responding to a demand by Shell and other oil companies for the inclusion of royalties in the new petroleum reform bill, Egbogah told a special conference session at the ongoing Society of Petroleum Engineers (SPE) International Conference that the Federal Government was already designing appropriate royalties for the communities.

He said: “I want to confirm that there is a work programme in progress to design appropriate royalties for communities. And I think that this will be completed in time to be put into the final Petroleum Industry Bill. I think with that, we bring to an end whatever it is – agitation or whatever-because we believe the communities will own very significant portion of the oil and gas business in Nigeria.”
 
The Managing Director of SPDC, Mr. Mutiu Sunmonu, and the Vice-Chairman and Chief Operating Officer of Emerald Energy Resources Limited, Dr. Jude Amaefule, as well as other industry operators that gathered for the conference had recommended payment of royalties to the communities as solution to the lingering crisis in the region.

Sunmonu stated that apart from the royalties, the oil companies should also go ahead with the execution of community development projects in the area, pointing out that whatever the oil companies do should not take the place of payment of royalties to the communities.

He said: “I really have in mind this issue of payment of royalties to the communities. Whatever oil companies do will not take the place of payment of royalties to oil communities; we have to do both. My company spends an average of $200 million yearly on community projects and we don’t intend to spend less. We will even be happy to spend more if the business fortune improves. But my point is that the government should start to look at the whole issue of royalties so that the communities can see a direct link with the oil and gas exploration activities in the communities. That is my point.”

The Vice-Chairman of Emerald Energy Resources Limited, Dr. Amaefule, called for a review of the Land Use Act so that a percentage of the royalties out of the 20 per cent or 18.5 per cent collected by the Federal Government goes to the oil communities.

Meanwhile, speaking earlier on “Funding and Investment in the Nigerian Oil and Gas Industry,” the Shell boss disclosed that the confidence of private investors in the operating environment of Nigeria’s oil and gas sector was very shaky.

Citing statistics from the Oil Producers Trade Section (OPTS), an association of oil- producing companies in Nigeria, Sunmonu stated that it would cost the oil industry $50 billion to meet President Yar’Adua’s targets in the sector, stressing that that means a large increase from the current levels of investment.

According to Sunmonu, given the scale of investment required in the medium term and in the longer term, it was clear that most of the money would have to come from the private sector- both energy companies and financial investors.

He said: “To commit such large sums, private investors need confidence in the investment environment. And that confidence right now is shaky.

As we all know, funding has been a critical obstacle for the industry in delivering growth in recent years. As a result, projects have stalled, new production delayed, and the industry is still flaring gas.”

Rising from a meeting with the President at the State House, Abuja, the six South-south governors, who were all in attendance, also called on all citizens of the zone to embrace the process to ensure its successful implementation.

Addressing State House correspondents at the end of the meeting, Chairman of the South-South Governors Forum and Governor of Cross Rivers State, Senator Liyel Imoke, stated that the issue of the reported relocation of the Petroleum University to Kaduna was discussed and the President assured them that there was no truth in the allegation.

Imoke also revealed that the governors resolved to have another meeting amongst themselves last night on the issue of amnesty and would follow it up today with another parley with the amnesty committee.

Imoke said: “After an extensive deliberation with the President, we as governors confirmed our unconditional support for the amnesty programme and our commitment to ensure that amnesty is implemented in the manner and form that Mr. President has envisaged it. We also as governors use this opportunity to call on all our citizens in the affected areas where amnesty is to be implemented to embrace this initiative to ensure that it is successful in the interest of the region.

“We also got Mr. President’s commitment on a number of issues.We are to meet with Mr. president as governors at a later date but all issues were discussed and as I said, we all give our commitment to ensure that the amnesty succeeds.

“Mr. President also clarified the issue of the movement of the Petroleum Institute which was not the official policy of government decision of the FEC and as such, the upgrading of that Institute to a university as proposed by the past administration still remains on course.”