Module 4 Transcripts.docx

Slide No. Slide Title What is heard (voice-over and sound effects) On-Screen Text/ Illustrations Developer Notes Welcome Welcome to the Petroleum Industry Act (PIA) Immersion course, Stream 2. This stream comprises three modules, namely: Modules four: gas Community Development Modules five: Petroleu...

Slide No. Slide Title What is heard (voice-over and sound effects) On-Screen Text/ Illustrations Developer Notes Welcome Welcome to the Petroleum Industry Act (PIA) Immersion course, Stream 2. This stream comprises three modules, namely: Modules four: gas Community Development Modules five: Petroleum Industry Fiscal Framework Modules six: Miscellaneous Provisions and Schedules Click here to begin with Module 4, Host Community Development. Welcome to the Petroleum Industry Act (PIA) Immersion course, Stream 2. Modules four: Host Community Development Modules five: Petroleum Industry Fiscal Framework Modules six: Miscellaneous Provisions and Schedules Click here to begin with Module 4, Host Community Development. Welcome Welcome to Module 4, Host Community Development. What would you like to be called in this course? Fill this into the box on the screen. Welcome to Module 4, Host Community Development. What would you like to be called in this course? Fill this into the box on the screen. Module Four: Host Community Development 1 Module Objectives By the end of this module, participants will be able to: Explain the purpose of Host Community Development (HCD) and Host Community Development Trust (HCDT) Describe the funding source and distribution formula of Host Community Development Trust (HCDT) Outline the governance structure of the Host Community Development Trust (HCDT) and their scope of authority Identify the mechanisms encoded in the Petroleum Industry Act (PIA) to ensure the development of the Host Community and prevent pipeline vandalism. Explain the purpose of Host Community Development (HCD) and Host Community Development Trust (HCDT) Describe the funding source and distribution formula of Host Community Development Trust (HCDT) Outline the governance structure of the Host Community Development Trust (HCDT) and their scope of authority Identify the mechanisms encoded in the Petroleum Industry Act (PIA) to ensure the development of the Host Community and prevent pipeline vandalism. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other Audio: All text 2 Outline We will take a look at the following: Overview of the Host Community Development Objectives of the Host Communities Development Regulation for Governance of Host Community Development The Host Communities' Development Trust Setup Governance and management The Trust Objectives Funding for the Trust Reporting Obligations Summary Overview of the Host Community Development Objectives of the Host Communities Development Regulation for Governance of Host Community Development The Host Communities' Development Trust Setup Governance and management The Trust Objectives Funding for the Trust Reporting Obligations How have the Niger Delta States faired Summary Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other Audio: All text 3 Overview Host communities significantly influence the success of activities in Nigeria's petroleum industry. Thus, they should be given priority in gaining immediate social and economic advantages from petroleum operations There were two types of host community development programs before the PIA was passed. The first category was voluntary and entailed oil mining lease operators establishing community development programs that were primarily managed under (Global) Memorandums of Understanding (MOU). These MOUs were negotiated between individual operators and the respective host communities. The host state government occasionally facilitated these MOUs. Government-led efforts, particularly those of the Niger Delta Development Commission (NDDC), fall under the second broad category. Companies that produce oil and gas in the Niger Delta basin were required by the NDDC Act to pay an annual NDDC tax equaling 3% of their annual budget. Since the passage of the PIA, settlors have been required to establish a host community development trust (also known as a "Trust") to benefit their host communities and to donate 3% of their operating expenses from the prior fiscal year to the fund of the Trust. The settlor's contribution to the Trust's fund is deducted for the costs of petroleum operations disruption caused by host community actions. It is anticipated that the Host Communities Development Trusts will oversee all voluntary host community development initiative efforts. The host community projects run by government parastatals, including the NDDC, and the associated levies payable by companies, will continue to be in force.. Host communities significantly influence the success of activities in Nigeria's petroleum industry. Thus, they should be given priority in gaining immediate social and economic advantages from petroleum operations Two types of host community development prior to PIA Voluntary: oil mining lease operators establishing community development programs primarily managed under Memorandums of Understanding (MOU). Government-led efforts: Niger Delta Development Commission (NDDC), companies producing oil and gas in the Niger Delta basin were required by the NDDC Act to pay an annual NDDC tax equaling 3% of their annual budget. Settlors have been required to establish a host community development trust (also known as a "Trust") The settlor's contribution to the Trust's fund is deducted for the costs of petroleum operations disruption caused by host community actions. The Host Communities Development Trusts will oversee all voluntary host community development initiative efforts. Visual description or sketch: Make sure the words on the screen sync with the audio. Images of host communities or animation representing host communities should be seen here When you talk of MOU, we should see animation of a handshake between oil workers and host community chiefs for example OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 4 Definition of the Host community PIA Definiton of the Host community The Petroleum Industry Act (PIA) defines a host community as any community that is situated in, adjacent to, or pertinent to a settlor's area of operation. A host community may also be any other community that a settlor determines under Chapter 3 of the PIA. A holder of petroleum prospecting license or mining lease and whose area of operations is situated inside or next to any community or communities is called a "Settlor." Other perspectives of host communities: A host community is where oil is extracted and houses the equipment used in oil exploration and extraction. A community that has suffered from oil exploitation is referred to as the host community. Although the businesses and amenities may not be local to that town, they influence or affect it. A community where hydrocarbon extraction occurs is a host community. What is a Host Community? The Petroleum Industry Act (PIA) defines a host community as any community that is situated in, adjacent to, or pertinent to a settlor's area of operation A holder of petroleum prospecting license or mining lease and whose area of operations is situated inside or next to any community or communities is called a "Settlor." The settlors must create the Host Communities Development Trust Other perspectives of host communities: A host community is where oil is extracted and houses the equipment used in oil exploration and extraction. A community that has suffered from oil exploitation is referred to as the host community. Although the businesses and amenities may not be local to that town, they influence or affect it. A community where hydrocarbon extraction occurs is a host community. Visual description or sketch: Make sure the words on the screen sync with the audio. Let’s see image or animation of community in vicinity of oil mining operations OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 5 Objectives of the Host Communities Development The objectives of the Host Communities Development are to: Promote host communities' long-term prosperity Give host communities immediate access to social and economic benefits from petroleum activities. Improve the peaceful and amicable coexistence of licensees or lessees and host communities Establish a framework to aid in the growth of host communities Objectives of the Host Communities Development Promote host communities' long-term prosperity Give host communities immediate access to social and economic benefits from petroleum activities. Improve the peaceful and amicable coexistence of licensees or lessees and host communities Establish a framework to aid in the growth of host communities Visual description or sketch: Make sure the words on the screen sync with the audio. Let’s see positive images- social amenities, hospitals, schools, happy people (animated or real images) OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 6 Regulation for Governance of Host Community Development Regulation for Governance of Host Community Development The Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum regulatory Authority are authorised by the Act to impose regulations on host communities regarding subjects that fall under their purview. In addition to a grievance process for settling disputes between settlers and host communities, the regulations must allow for adjustments to lower costs in cases where the administration's available funds are insufficient to cover ongoing operations. The Act requires the Commission to create regulations controlling how the Host Community Development (HCD) is implemented. The following should be included in the rules: i) A grievance procedure for resolving conflicts between the settlor and host communities. ii) The ability of the settlor to minimise expenses when the funding sources for the management of Host Community Development Trust (HCDT)are insufficient by taking the following actions: a)Reduce the BoT's membership and meeting frequency in step b) Not establishing a reserve fund or hiring a fund manager c) Decrease the management committee's membership and meeting frequency. d) Reduce the host community advisory committee's regular meeting schedule. The Commission and Authority are authorised by the Act to impose regulations on host communities regarding subjects that fall under their competence and jurisdiction as specified in this act. The Commission creates regulations controlling how the Host Community Development (HCD) is implemented. The rules should include the following: i) A grievance procedure for resolving conflicts between the settlor and host communities. ii) The ability of the settlor to minimise expenses by taking the following actions: a)Reduce the BoT's membership and meeting frequency in step b) Not establishing a reserve fund or hiring a fund manager c) Decrease the management committee's membership and meeting frequency. d) Reduce the host community advisory committee's regular meeting schedule. Let’s see images of setting for grievance settling, community council arbitration process Money exchange and handshake Animation of people meeting and reduced numbers of people 7 The Host Communities' Development Trust Setup Based on the Company and Allied Matters Act (CAMA) guidelines and pertinent PIA regulations, each settlor is obligated to incorporate a Host Community Development Trust (HCDT) to benefit its host community. "Host Communities' Development Trust" must be included in the HCDT's name when registering. The operator will be expected to carry out host community development duties on behalf of other settlors under the joint operating agreement (JOA), where more than one settlor has signed into a JOA regarding upstream petroleum operations. PIA imposes various incorporation timeframe based on the underlying licence or lease type, which has been examined in the table. These specified facilities are those that support petroleum operations. Please take a moment to view various facilities and their timelines. Any license or lease covered by the Act may be revoked if it does not adhere to the allotted time frame. Upon the transfer of an interest in a licence or lease, the development rights and obligations of the associated host communities shall be regarded as being passed to the transferee. Even if a new licensee or leasee has been awarded the license or lease, the holder will still be responsible for fulfilling any remaining obligations of the HCDT if the license or lease is relinquished (entirely or partially), revoked, cancelled, or expired. Each settlor is obligated to incorporate n HCDT to benefit its host community. This is referred to as "Host Communities' Development Trust" The operator will be expected to carry out host community development duties on behalf of other settlors under the Joint Operating Agreement (JOA), PIA imposes various incorporation timeframe based on the underlying licence or lease type Category Timeline Existing designated facilities 12 months from the effective date New designated facilities under construction Existing Oil Mining License (OML) Existing OPLs Before an application for a field development plan PPLs and PMLs Licences for designated facilities under PIA Before the commencement of commercial operations Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 8 The Trust Objectives The following are some of the Trust's goals: a) To finance and carry out initiatives that will benefit and sustain the host communities b) To assist regional efforts within the host communities that aim to improve security; c) To promote chances for economic empowerment and entrepreneurship in the host communities; d) To promote and accelerate educational advancement for the benefit of residents of host communities; e) To develop the host communities' infrastructure within the constraints of the funding the BoT has available for such purposes; f) To assist regional activities in the host communities that aim to strengthen environmental protection; g) To invest a portion of the available funds in the host communities' interest; h) To assist host communities in developing their healthcare systems; and i) To help with any other developmental goals thought to be advantageous to the host communities, as approved by the Board of Trustees. The following are some of the Trust's goals: a) To finance and carry out initiatives that will benefit and sustain the host communities b) To assist regional efforts within the host communities that aim to improve security; c) To promote chances for economic empowerment and entrepreneurship in the host communities; d) To promote and accelerate educational advancement for the benefit of residents of host communities; e) To develop the host communities' infrastructure within the constraints of the funding the BoT has available for such purposes; f) To assist regional activities in the host communities that aim to strengthen environmental protection; g) To invest a portion of the available funds in the host communities' interest; h) To assist host communities in developing their healthcare systems; and i) To help with any other developmental goals thought to be advantageous to the host communities, as approved by the Board of Trustees. Visual description or sketch: Make sure the words on the screen sync with the audio. Let’s see images of icons that represent : Financing, Security, Economic empowerment Education Infrastructure Environmental protection Health care All should appear in sync with the text it represents OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text Governance and management 9 The Governance structure Relevant provisions in PIA are the cornerstone of the HCDT's effective governance and management system. The settlor, the Board of Trustees (BOT), the management committee, and an advisory committee for each host committee are all included in the governance structure. Below are some highlights of the composition and responsibilities of each component of the governance and management framework for HCDTs: The settlor The Board of Trustees (BoT) The Management Committee The Advisory Committee Click on each to learn more. The settlor The Board of Trustees (BoT) The Management Committee The Advisory Committee Click on each to learn more. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 9a The Settlor The settlors must create the Host Communities Development Trust under Section 235 to benefit the host communities for which they are responsible. These Trusts may be required to finance and carry out predetermined development projects for the host communities. The Trustees, chosen by the Settlors, should include people of high integrity and professional standing. They may not necessarily come from any of the host communities. In addition, Section 251 requires the settlor to examine each host community's requirements and draft a community development plan to address those needs. Duties of Settlors Establish the Board of Trustees for the Trust; Determine the composition and membership of the Board of Trustees and the criteria for the appointment of each Trustee subject to the approval of the Commission or Authority; Appoint and remove the members of the Board of Trustees Establish a fund in the name of the Trust The settlors must create the Host Communities Development Trust under Section 235 to benefit the host communities for which they are responsible. The Trustees, chosen by the Settlors, should include people of high integrity and professional standing. They may not necessarily come from any of the host communities. Duties of Settlors Establish the Board of Trustees for the Trust; Determine the composition and membership of the Board of Trustees and the criteria for the appointment of each Trustee subject to the approval of the Commission or Authority; Appoint and remove the members of the Board of Trustees Establish a fund in the name of the Trust Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 9b The Board of Trustees (BoT), The Board of Trustees is responsible for the Trust's overall management, including the administration of the yearly contribution. To run the Trust, the settlor must, in line with the act, appoint and authorise a Board of Trustees (BoT), which will be registered with the Corporate Affairs Commission. Each member of the Board of Trustees (BoT) is appointed for four (4) years and can be reappointed for additional term of four (4) years. Duties of the Board of Trustees The Board of Trustees is in charge of the Trust's overall management and is accountable for; Deciding the standards, procedures, and percentage of the fund to be allocated to particular development activities; Approving the projects to be funded by the fund; Providing overall direction for the initiatives the fund will be used for; Authorising the hiring of fund managers to oversee the reserve fund; The formation of the management committee and the selection of its members; Using the matrix provided by the settlor to allocate money to host communities; and Selecting and dismissing the Secretaries to the Board of trustees The Board of Trustees is responsible for the Trust's overall management, including the administration of the yearly contribution. Each member of the Board of Trustees (BoT) is appointed for four (4) years and can be reappointed for additional term of four (4) years Duties of the Board of Trustees Deciding the standards, procedures, and percentage of the fund to be allocated to particular development activities; Approving the projects to be funded by the fund; Providing overall direction for the initiatives the fund will be used for; Authorising the hiring of fund managers to oversee the reserve fund; The formation of the management committee and the selection of its members; Using the matrix provided by the settlor to allocate money to host communities; and Selecting and dismissing the Secretaries to the Board of trustees Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text This list should also be accompanied by icons or images that represent the subject in discsussion. 9c The Management Committee The Management Committee is responsible for the general administration of the Trust. According to the act, the BoT must establish a management committee that consists of other executive members with good moral character and appropriate credentials and one non-executive member from each host community. Duties of the management committee: a. Prepare the Trust's budget and submit it for approval to the Board of Trustees; b. Create and administer the project awarding procedure on behalf of the Trust, subject to the Board of Trustees' approval; c. Select contractors to carry out projects on behalf of the Trust through a transparent selection procedure, subject to the Trustees approval; d. Oversee project execution e. Recommend fund managers to the Board of Trustees for appointment to oversee the reserve fund; f. Update the Board of Trustees on the operations of the Management Committee, contractors, and other service providers; The Management Committee is responsible for the general administration of the Trust. Duties of the Management Committee: a. Prepare the Trust's budget and submit it for approval to the Board of Trustees; b. Create and administer the project awarding procedure on behalf of the Trust, subject to the Board of Trustees' approval; c. Select contractors to carry out projects on behalf of the Trust through a transparent selection procedure, subject to the Trustees approval; d. Oversee project execution e. Recommend fund managers to the Board of Trustees for appointment to oversee the reserve fund; f) Update the Board of Trustees on the operations of the Management Committee, contractors, and other service providers; Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 9d The Host Community Advisory Committee The Advisory Committee tracks and updates the Management Committee on the status of ongoing projects. The Management Committee shall establish the Host Community Advisory Committee ("Advisory Committee") following the Trust's bylaws. The Advisory Committee will select representatives for the host communities on the Management Committee and inform them of community development initiatives. Duties of the Advisory Committee: The responsibilities of the Advisory Committee include the following: Suggest a candidate to serve on the Management Committee as the Host Communities' representative; Describe to the Management Committee the community development projects; Keep track of and update the Management Committee on the status of community projects; Provide the Management Committee with recommendations on actions that could strengthen community peace-building efforts and increase infrastructure security; and Assume primary responsibility for facility protection and ensure that community members can carry out petroleum operations without interruption; otherwise, benefits from the Trust to the host community will not be allowed. The advisory committee meetings' rules should comply with the HCDT Constitution and decisions taken by MACOM, which must receive BOT approval. The Advisory Committee tracks and updates the Management Committee on the status of ongoing projects.. Duties of the Advisory Committee: The responsibilities of the Advisory Committee include the following: Suggest a candidate to serve on the Management Committee as the Host Communities' representative; Describe to the Management Committee the community development projects; Keep track of and update the Management Committee on the status of community projects; Provide the Management Committee with recommendations on actions that could strengthen community peace-building efforts and increase infrastructure security; and Assume primary responsibility for facility protection and ensure that community members can carry out petroleum operations without interruption; otherwise, benefits from the Trust to the host community will not be allowed. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text List should be accompanied by icons or images that represent the subject in discussion Funding for the Trust 10a Source of funding for the Trust Sources of Funding for petroleum host communities development fund Each settlor is required under the PIA to contribute to the Trust 3% of its actual operating expenses in the prior calendar year's upstream petroleum operations. The HCDT may also be supported by gifts, grants, honoraria, contributions, and interest to the Trust's reserve fund (received to further its goals). In a joint venture agreement, the operator chosen by the parties to the agreement will be in charge of developing the host communities on behalf of the settlors. Due to this, each settlor under a joint venture contract is obligated to pay an annual contribution to the Trust through the designated operator. According to the Act, payments made by a settlor to the Trust are deductible for hydrocarbon tax and the company's income tax, respectively, while the funds of the HCDT are tax-exempt. Sources of Funding for petroleum host communities development fund 3% of its actual operating expenses in the prior calendar year's upstream petroleum operations. Gifts, grants, honoraria, contributions, and interest to the Trust's reserve fund (received to further its goals). Each settlor under a joint venture contract must pay an annual contribution to the Trust through the designated operator. The funds of the HCDT are tax-exempt. Visual description or sketch: Make sure the words on the screen sync with the audio. We should see animation of the 3% and the gifts,/contributions entering into a pot called host community development trust OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 10b Funds forfeited and the basis for computation. Funds forfeited and the basis for computation. If an act of vandalism, sabotage, or civil unrest damages the petroleum and designated facilities or disrupts production activities within the host community, the host community will forfeit its right to any contribution. Therefore, the computed cost of such repairs or disruption in petroleum production shall not be included in the amount donated by the settlor to the Trust. This clause is meant to encourage the host communities' accountability and responsibility for the petroleum assets used in their local areas. vandalism, sabotage, or civil unrest damages the petroleum and designated facilities disrupts production activities within the host community the computed cost of such repairs or disruption in petroleum production shall not be included in the amount donated by the settlor to the Trust. This clause is meant to encourage the host communities' accountability and responsibility for the petroleum assets used in their local areas. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 10c Distribution of Funds Distribution of Funds The PIA mandates that for yearly contributions to the fund, the BoT should use the following allocation ratio: a) A reserve fund of 20% of annual contributions must be maintained. Additionally, when donations from the settlor stop, the reserved fund will be invested for use by the Trust. b) Capital projects shall receive 75% of the annual contribution; c) No more than 5% of the annual donation may be used for administrative cost of running and special projects BOT to allocate funds as follows: 20% Reserved Fund 75% Capital Projects 5% Operating Expense Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text Accountability provision for the Host Community Development Trust Fund 11 Reporting Obligations The PIA puts specific measures in place to ensure prudent utilisation of the Host Community Development funds. These measures include: The Host Communities' Development plan (HCDP) Financials and Audit system Mid-year/ Annual Reporting system Click each to learn more The Host Communities' Development Plan (HCDP) Financials and Audit system Mid-year/ Annual Reporting system 11a Host communities' Development plan (HCDP) The Host communities' Development plan (HCDP) According to the PIA, there must be a Host Communities' Development plan (HCDP) to ensure transparency in operations, and it must contain the following: a) The community development efforts necessary to solve the problems indicated in the needs assessment of the host community b) Concrete strategy for putting the development initiatives into practice c) A detailed schedule for the projects mentioned. d) The Host Communities' Development plan (HCDP) budget e) The motivations behind each project, as supported by the requirements analysis of the host community. f) Compliance with the Nigerian Oil and Gas Industry Content Development Act's standards for Nigerian content. g) Ongoing evaluation and Commission reporting The Authority by regulation would need to prescribe the manner in which flare penalty funds meant for the Midstream & Downstream Gas Infrastructure funds will be utilized in Host Community either in supporting flare projects or investing on behalf of the host community in such projects or excess funds to be managed by the Host Community Trustees ) The community development efforts necessary to solve the problems indicated in the needs assessment of the Host Community b) Concrete strategy for putting the development initiatives into practice c) A detailed schedule for the projects mentioned. d) The Host communities' Development plan (HCDP) budget e) The motivations behind each project, as supported by the requirements analysis of the host community. f) Compliance with the Nigerian Oil and Gas Industry Content Development Act's standards for Nigerian content. g) Ongoing evaluation and Commission reporting The Authority by regulation would need to prescribe the manner in which flare penalty funds meant for the Midstream & Downstream Gas Infrastructure funds will be utilized in Host Community either in supporting flare projects or investing on behalf of the host community in such projects or excess funds to be managed by the Host Community Trustees Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 11b Financials and Audit system To ensure compliance with the host community's financial regulations, the following is required: The BOT is obliged to keep track of the HCDT's financial activities The BOT is obliged to choose auditors to review the HCDT's financial records annually, and The BOT is obliged to publish the audited accounts The HCDT's fiscal year runs from January 1 to December 31 of every year, but the BOT may decide to designate a different date as long as it is consistent with the requirements of CAMA. The BOT is obliged to keep track of the HCDT's financial activities The BOT is obliged to choose auditors to review the HCDT's financial records annually, and The BOT is obliged to publish the audited accounts Let’s see animation of a group called BOT monitoring the fund’s activities and the publishing of records 11c Mid-year/ Annual Reporting The PIA makes the following provisions to ensure transparency and accountability in the management of Host Community funds: (a) 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; (b) 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; (c) 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; (d) 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. (a) Mid-year report on its activities not later than August 31 of the given year; (b) Annual report and its audited financial statements not later than February 28 of the succeeding year; (c) 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; (d) The settlor must submit to the Commission or Authority as may be applicable an annual report not later than May 31 of the particular year. Visual description or sketch: Make sure the words on the screen sync with the audio. Let’s see animation of a timeline and the appearance of reports at different intervals. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 14 Summary Before we begin the quiz or proceed, let’s do a quick review of what we've covered in this module. Host Communities Development aims to foster long-term prosperity, provide host communities with direct access to benefits from petroleum activities, increase peaceful and amiable coexistence between host communities and operators, and develop a framework to aid in host community growth. According to the Petroleum Industry Act, the Board of Trustees must allocate 20% of yearly contributions to a reserve fund, 75% to capital projects, and no more than 5% to administrative costs. The Settlor, Board of Trustees, Management Committee, and Advisory Committee comprise the Host Communities Development Trust's governance and management framework. Where: The Settlors are responsible for forming a Board of Trustees, appointing and removing members, and establishing funds in the name of the Trust. The Board of Trustees is responsible for establishing standards, procedures, and the percentage of funds allocated to development activities, approving projects, monitoring financial activities, providing guidance, hiring fund managers, and constituting a management committee. 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. Assuming primary responsibility for facility protection. The Act empowers the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority to impose regulations on host communities on matters within their purview. The Act requires the Commission to develop regulations that include grievance procedures for resolving disputes between the Settlor and host communities and steps to minimize expenses when funding sources are insufficient. The Authority determines how flare penalty funds will be spent or invested on behalf of a Host Community. If an act of vandalism, sabotage, or civil unrest damages or disrupts production activities in the host community, the host community will forfeit its entitlement to any contribution. Host Communities Development promotes long-term prosperity, direct access to petroleum benefits, peaceful and amicable cooperation between host communities and operators, and host community growth. The Petroleum Industry Act requires the Board of Trustees to allocate 20% of annual contributions to a reserve fund, 75% to capital projects, and 5% to administrative costs. The Settlor, Board of Trustees, Management Committee, and Advisory Committee govern the Host Communities Development Trust. Where: The Settlors establish a Board of Trustees, appoint and remove members, and establish Trust funds. The Board of Trustees sets criteria, methods, and the development activity, approves projects, monitors financial operations, provides guidance, hires fund managers, and forms a management committee. The management committee prepares the Trust's budget, develops and implements the project awarding procedure, selects contractors, supervises project execution, proposes fund managers, and reports to the Board. Advisory Committee duties: Management Committee nomination. Outlines community development plans. Recommend peacebuilding initiatives. Managing facility security. The Act allows the Nigerian Upstream Petroleum Regulatory Commission and Nigerian Midstream and Downstream Petroleum Regulatory Authority to regulate host communities. The Act compels 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. The host community forfeits its contribution if vandalism, sabotage, or civil unrest hinders production activities in the host community. 16 End of Module Well done! You have come to the end of the module. Well done! Proceed to the assessment. Click "Begin" to start the Progress Test. 17 Closing slide Well done! You have come to the end of the module. We trust this has been an exciting learning experience for you thus far. Let's proceed to the next Module! Well done! See you in Module 5!