FG: 10% Community Stake Won’t Affect IOCs

Written by Duncan Wednesday, 21 October 2009

The Federal Government has moved swiftly to allay the fears of International Oil Companies (IOCs) over its plan to allocate 10 per cent of its joint venture businesses to oil-producing communities in the Niger Delta.
Presidential Adviser on Petroleum Matters, Dr. Emmanuel Egbogah, told Reuters yesterday that the plan which is part of President Umaru Musa Yar’Adua’s initiative for long-lasting solution to the oil region’s restiveness would not dilute the interest of the IOCs in the JV businesses.

The Federal Government, through the Nigerian National Petroleum Corporation (NNPC), currently holds an average of 57 per cent in the JV operations with Shell, Chevron, ExxonMobil, Total and Agip in the upstream sector.

However, under government’s new initiative, Niger Delta communities would be given 10 per cent of NNPC’s stake.

“The foreign oil companies won't be affected. This is our thing to give back to the Niger Delta,” Egbogah was quoted as saying. Minister of Petroleum Resources, Dr. Rilwanu Lukman, also confirmed at a conference in London yesterday that details of the deal were being worked out.

“The details are still being worked out. We are looking for an arrangement that would be good for the country and good for the [Niger] Delta people,” he said.

Egbogah had on Monday confirmed THISDAY’s earlier report that President Yar’Adua was planning to send a request to the National Assembly to approve the allocation of 10 per cent of Nigeria's oil and gas joint ventures to the oil-producing Niger Delta communities.

Egbogah told the Financial Times (FT) that the President supported transferring wealth from the national oil company to delta communities – an initiative to promote a sense of ownership.

According to the FT, government officials believe the community stakes could be worth more than N50 billion ($338 million) in the first year.

The newspaper said the initiative, if approved by the National Assembly, would signal a new phase in government efforts to forge a lasting peace in the key production area of the world's eighth largest oil exporter.

But FT said the plan had to clear expected opposition from other Nigerian regions.

Group Managing Director, NNPC, Dr. Mohammed Barkindo, also confirmed that discussions were being held to find ways to give a share of the oil wealth to the nine oil-producing Niger Delta states.

"We are looking at the various options on how we can empower the producing communities without violating the current laws," Barkindo said.

THISDAY reported other post-amnesty plans of the government yesterday, specifically the “stimulus” for public works in the region, subject to appropriation by the National Assembly.

The Federal Government’s share of the $2 billion stimulus for the economy, which is $950 million, will be exclusively devoted to projects in the oil-producing region as Yar’Adua seeks peace in an area that has cost Nigeria billions of dollars in revenue since militancy started in 2006, disrupting oil production and leading to the shut-in of nearly one-third of output.

The amount is a “down payment” – or first instalment – in Yar’Adua’s overall post-amnesty package to accelerate development in the region after years of restiveness.

THISDAY learnt that Vice-President, Goodluck Jonathan has already met with the leaders of the National Assembly, including Senate President David Mark and Speaker Dimeji Bankole, to facilitate the appropriation of the supplementary budget so as to sustain the current momentum in the resolution of the crisis.

The projects, according to THISDAY sources, include the East-West road, design and construction of fast-track rail lines and Environmental Impact Assessments (EIAs) of the entire region to re-assess the impact of exploration activities, a major concern of the pro-Niger Delta campaigners.