The Nigerian Upstream Regulatory Commission (NUPRC) has introduced a cutting-edge online platform designed to ease regulatory compliance and oversight functions and enable operators in the Nigerian oil and gas industry to meet regulatory requirements in a timely, efficient, cost-effective manner.
In a groundbreaking partnership entered into with industry stakeholders the Commission, in line with its statutory mandate as the regulator of the upstream oil and gas sector, on Friday launched the digital solution known as HostComply to streamline reporting of environmental, social and governance (ESG) management for operators, host communities, and the regulators, a cardinal requirement of the Petroleum Industry Act (PIA) 2021..
Given the friction often experienced between operators in the petroleum sector and their host communities, HostComply was strategically developed to offer comfort to the Host Community Development Trust (HCDT) by providing stakeholders with a robust technological tool to interface and engage with the settlors (operators) and manage projects in their respective host communities professionally in conformity with ESG global best practices. The digital solution revolutionalises HCDT management and ESG reporting, is fully transparent and eliminates human interference.
Chapter 3, Section 235(1) of the PIA (2021) requires that “the settlor incorporates host communities development trust for the benefit of the host communities for which it is responsible; and Section 235(4) states: “The settlor shall for the purpose of setting up the trust, in consultation with the host communities, appoint and authorise a board of trustees (“the Board of Trustees”), which shall apply to be registered by the Corporate Affairs Commission as a corporate body under the Companies and Allied Matters Act in the manner provided under this Chapter”.
The HostComply therefore offers numerous advantages to the operating companies (settlors) and the host communities including streamlining reporting and monitoring obligations, building trust and credibility, providing a centralised system for managing data related to community development and ESG reporting, ensuring compliance with regulatory requirements and building trust with communities, investors, and other stakeholders, to ramp-up oil production and revenue for the settlors and the Federal Government; providing business analytics that will help settlers, regulators and other stakeholders identify trends, opportunities, and areas for improvement in their community development and ESG reports.
The portal will enable the settlor to upload the incorporated HCDT registered, upload the 3% operating expenditure (Opex) by assets for verification by the Regulator; track, analyze, and report on the use of funds for community development initiatives and foresee failure points by leveraging the data insights and mitigates against them. For the HCDT, the portal provides a consistent and predictable administrative environment for interfacing with the settlors and the regulator, allows the HCDT to upload and showcase projects to be executed by the Communities, provides easy proof of 3% Opex to be paid by settlors as verified by the regulator, as well as provides an opportunity to measure and monitor distributional equity amongst the communities.
The HostComply allows the regulator to detect and identify non-compliant situations through IT forensics and compliance Intelligence tools, real-time monitoring of the progress of projects being executed by the HCDT, issue demand notices on the payment of the 3% Opex contribution by the settlors and verify the 3% Opex contribution and its distribution. For civil society organisations and the public, the portal allows It allows an open common framework for information gathering to monitor accountability and probity in the management of 3% OPEX at the community level, as well as public education, enlightenment, mobilisation, monitoring, oversight, whistle-blowing, observation and feedback.
Urging stakeholders to fully utilise the portal to ensure regulatory compliance with the provisions of the law, NUPRC indicated that failure of compliance has serious implications and attracts sanctions, which include revocation of licence or lease. “Pursuant to the following sections of the PIA, 2021, and for the avoidance of doubt, the licence or lease of a settlor may be revoked if it fails to comply with the host communities’ obligations under Section 96(n) of the Act.
“On the failure to incorporate host communities development trust, Section 238 says “Unless as otherwise provided for in this Act, failure by any holder of a licence or lease governed by this Act to comply with its obligations under this Chapter, after having been informed of such failure in writing by the Commission as the case may be, may be grounds for revocation of the applicable licence or lease”.
When fully deployed, the portal will have other capabilities including enabling approvals of the constitution, winding up and dissolution of the Trust and fund; verification of account details of the Trust, annual audited report of the 3% Opex computation and Contribution to the fund. It is also a platform for the review of all reports generated by the trust; enables the annual registration of the fund managers with the Commission and allows for the monitoring of the management of the reserve fund; interface for submission of complaints and petitions, reporting of fraud, breaches, and malpractices; and an Administrative Module which will act as a performance evaluation and analytics dashboard for each user group and general overview, management of access rights and permissions as well as review of audit trails.
The NUPRC is committed to fostering stronger relationships between operators, host communities and regulators; and enhancing the dividends of petroleum resources for the prosperity of all stakeholders. HostComply represents a significant step forward in achieving this vision and a revolutionary solution that will transform the way critical stakeholders handle Trust Management and ESG Reporting. Information about HostComply can be found at hostcomm@nuprc.gov.ng