Lucky Obukohwo, Reporting
The House of Representatives has vowed to investigate the $20 billion shortfall in oil firms’ Decommissioning and Abandonment (D&A) funds owing to alleged non-compliance with the extant laws.
The House also resolved to set up an Ad-hoc Committee to investigate D&A compliance in the petroleum industry in line with the Petroleum Industry Act ( PIA), following risk of abandoned assets, pollution and stranded costs.
This followed the adoption of a motion by Zakaria Dauda Nyampa, at yesterday’s plenary, on alleged non-compliance with the D&A guidelines by operators in the oil industry.
Nyampa, in his motion, accused regulatory agencies of allegedly failing to effectively enforce penalties, resulting in environmental risks and loss of governance credibility and fiscal leakages.
Across oil-producing countries, operators are required to set aside funds during the productive phase of their assets to cover the future costs of dismantling, site remediation and restoration.
“This principle is clearly enshrined in Nigeria’s Petroleum Industry Act (PIA) 2021 and the NUPRC/NMDPRA Decommissioning and Abandonment Regulations of 2022, yet compliance remains alarmingly poor.”
According to him, Sections 232 and 233 of the PIA mandate licensees and lessees to establish decommissioning programmes, maintain dedicated escrow accounts, obtain regulatory approvals as well as pay penalties for non-compliance.
Nonetheless, the lawmaker noted that “Unfortunately, most operators in the upstream, midstream and downstream sectors are flouting these provisions,” he lamented. “In some cases, International Oil Companies (IOCs) have divested from assets in the Niger Delta without adequate D&A funding, effectively transferring future environmental and financial liabilities to the government and host communities.