Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), has explained that the allocation of three percent oil companies operating expense to host communities is higher than 30 percent of profit oil and gas for frontier exploration in terms of value.
Kyari gave this explanation during NTA interview programme on Tuesday, saying the allocation for host communities has a low percentage but a bigger value.
He said “For instance, when you say 30 percent profit oil and gas from NNPC shares or from PSC, it is a very small number. The percentages appear very outrageous but 30 percent of what? Nobody has sat down to look at it. When you say profit oil 30 percent, it probably comes down to less than $400 million per annum,”
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“But when you come to the host communities, you have three percent of our operating expense. We spent about $16 billion in fiscal 2020 in our operating expense across the industry. So when you take three percent of that number it comes above $500 million far above the budget of NDDC.
“You can see that those percentages don’t reflect the realities that we are trying to achieve by this. And for profit oil, there are lots of uncertainties around it because if you don’t make profit it is zero but you must spend money to do operating expense.
“We are very sure that provisions that are meant for host communities will be implemented and delivered.”
