Questions and Answers
What should be given priority in gaining immediate social and economic advantages from petroleum operations?
Host communities
What type of community development programs are primarily managed under Memorandums of Understanding (MOU)?
Voluntary host community development
What is the annual NDDC tax that companies producing oil and gas in the Niger Delta basin are required to pay?
3% of their annual budget
What is the purpose of the settlor's contribution to the Trust's fund?
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What oversees all voluntary host community development initiative efforts?
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What is the primary purpose of establishing a host community development trust?
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What type of community development initiatives are managed by the Niger Delta Development Commission (NDDC)?
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What is required to be established by settlors?
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What is the responsibility of the holder if the license or lease is relinquished, revoked, cancelled, or expired?
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What is the primary purpose of the HCDT?
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Who is responsible for carrying out host community development duties under the Joint Operating Agreement (JOA)?
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What determines the incorporation timeframe for the HCDT?
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When does the incorporation of the HCDT take place for new designated facilities under construction?
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What is the purpose of the PIA?
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Who is obligated to incorporate the HCDT?
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What is one of the Trust's goals for the host communities?
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What is the term for the trust established to benefit the host community?
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What is NOT one of the Trust's goals?
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What does the Trust aim to do for the host communities' healthcare systems?
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What is one way the Trust supports educational advancement in the host communities?
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What does the Trust do with a portion of the available funds?
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What is one way the Trust supports regional efforts in the host communities?
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What is one of the Trust's goals for regional efforts in the host communities?
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What requires approval from the Board of Trustees?
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Who are responsible for appointing and removing members of the Board of Trustees?
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What is the main purpose of the Host Communities Development Trust?
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Who should the Trustees include?
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What is required of the Settlors under Section 251?
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What must the Settlors create under Section 235?
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Why may the Trustees be required to finance and carry out development projects?
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Who determines the composition and membership of the Board of Trustees?
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What must the Settlors establish in the name of the Trust?
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What is the primary obligation of the BOT in relation to HCDT's financial activities?
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What is the deadline for the management committee to present its mid-year report to the BOT?
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What is the deadline for the settlor to submit the annual report to the Commission or Authority?
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What is the duration of the HCDT's fiscal year?
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Who is responsible for choosing auditors to review the HCDT's financial records?
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What is the deadline for the management committee to present its annual report to the BOT?
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Who is responsible for publishing the audited accounts?
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What is the purpose of the BOT's obligation to publish the audited accounts?
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The Management Committee is responsible for selecting fund managers and reporting to the Advisory Committee.
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The Act allows the Nigerian Upstream Petroleum Regulatory Commission to regulate host communities.
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The Advisory Committee duties include supervising project execution.
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The Host Community forfeits its contribution if production activities are hindered due to vandalism or sabotage.
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The Management Committee is responsible for proposing the Trust's budget.
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The Authority determines how flare penalty funds will be invested on behalf of the Host Community.
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The Act compels the Commission to create cost-cutting measures where funding sources are sufficient.
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The Management Committee is responsible for outlining community development plans.
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The Trust's budget is prepared by the Board of Trustees.
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The Commission is responsible for regulating the Host Community, under the Act.
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Study Notes
Host Community Development Trust (HCDT)
- The HCDT is established to benefit the host community, and each settlor is obligated to incorporate it.
- The settlor's contribution to the Trust's fund is deducted from the costs of petroleum operations disruption caused by host community actions.
Responsibilities of the Settlor
- Establish the Board of Trustees for the Trust
- Determine the composition and membership of the Board of Trustees
- Appoint and remove the members of the Board of Trustees
- Establish a fund in the name of the Trust
Objectives of the Host Communities Development Trust
- To finance and carry out initiatives that benefit and sustain the host communities
- To assist regional efforts within the host communities to improve security
- To promote economic empowerment and entrepreneurship in the host communities
- To promote and accelerate educational advancement for the benefit of residents of host communities
- To develop the host communities' infrastructure within the constraints of the funding available
- To assist regional activities in the host communities that aim to strengthen environmental protection
- To invest a portion of the available funds in the host communities' interest
- To assist host communities in developing their healthcare systems
- To help with any other developmental goals thought to be advantageous to the host communities, as approved by the Board of Trustees
Governance and Management Framework
- The Host Communities Development Trust's governance and management framework consists of the Settlor, Board of Trustees, Management Committee, and Advisory Committee
- The Board of Trustees is responsible for the Trust's overall management, including the administration of the yearly contribution
- The Management Committee is responsible for preparing the Trust's budget, developing and implementing the project awarding procedure, selecting contractors, supervising project execution, proposing fund managers, and reporting on activities to the Board of Trustees
- The Advisory Committee's duties include nominating a candidate for the Management Committee, outlining community development projects, recommending activities to promote community peace-building, and assuming primary responsibility for facility protection
Financial Reporting Obligations
- The management committee must present to the Board of Trustees a mid-year report on its activities no later than August 31 of the given year
- The management committee shall present to the Board of Trustees an annual report and its audited financial statements no later than February 28 of the succeeding year
- The settlor must receive an annual report from the host communities development trust's operations from the Board of Trustees by March 31 of the particular year, along with the Trust's audited financial statements
- Not later than May 31 of each year, the settlor must submit to the Commission or Authority, as applicable, an annual report of the activities of the host communities development trust and a copy of its audited financial statements
Regulation of Host Community Development
- The Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority have the power to impose regulations on host communities on matters within their purview
- The Act empowers the Commission to create grievance procedures for Settlor-host community issues and cost-cutting measures where funding sources are insufficient
- The Authority determines how flare penalty funds will be spent or invested on behalf of a Host Community
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