Host Community Rights Under the Petroleum Industry Act in Nigeria: The Journey So Far – Stanley Negbenebor & Prisca Enwerem
In Nigeria, the issue of host community rights has gained significant attention due to the nation’s reliance on natural resources, particularly in the oil and gas sector. The exploration and extraction of these resources often occur in regions inhabited by host communities, raising concerns about their rights, compensation, and overall well-being. Over the years, the Nigerian government has implemented various laws and regulations to address these concerns and ensure that host communities are adequately protected and compensated for the use of their land and resources.
Host communities hold a pivotal role in the success of Nigeria’s petroleum industry operations, with their collaboration influencing profitability in the capital-intensive sector, collaboratively. Yet, historical interactions between these communities and oil companies have often been tense, leading to disruptions and oil-related incidents. These conflicts have potentially contributed to crude oil theft, pipeline vandalism, and field shutdowns, as evidenced by the government’s failure to meet its OPEC production quota due to reduced output. The underlying causes of this hostility partly stem from underdeveloped host communities. Hence, the petroleum industry act was established in a quest to redress these grievances.
The Petroleum Industry Act (PIA)
One of the most significant legal developments in Nigeria’s efforts to address host community rights is the Petroleum Industry Act (PIA). This comprehensive legislation aims to regulate the entire spectrum of the petroleum industry, including exploration, production and revenue sharing.
In Chapter 3 of the Act provides for host communities development and modalities for the establishment of the Host Community Trust Fund. The PIA emphasizes the importance of host community development by establishing a framework for community engagement, benefit-sharing, and environmental protection. The Act requires petroleum companies to contribute a percentage of their operating expenditures to a Host Community Development Trust Fund (hereafter referred to as HCDT), which will be used for community development projects.
Host Community Development Trust Fund
One of the noteworthy features of the PIA is the creation of the Host Community Development Trust Fund (“Trust Fund”). Section 235 of the Act provides for the incorporation of host communities development trusts.
This fund is intended to address the socio-economic and infrastructural needs of host communities. A percentage [ % ] of the operating expenditures of oil and gas companies operating in a particular host community will be allocated to this fund. The funds will be used for community development projects, capacity building, education, healthcare, and other initiatives that benefit the host communities directly.
As provided under section 235 of the act, the HCDT is established for the benefit of host communities and these host communities can be sort to mean communities under the provision of section 235(3) of the Act or communities in or appurtenant to communities in the area of operations of petroleum companies or operators.
The HCDT as provided under the Act, provides that where there is more than one licensees on an oil and gas asset operating under a joint operating agreement with respect to upstream petroleum operations, the Operator appointed shall be responsible for compliance with this chapter on behalf of the licensees. This provision implies that the Operators within the scope of the HCDT are those in the upstream sector.
Also, it is pertinent to note that the distribution of funds for the HCDT is outlined in Sections 240 and 244 of the Act. The Board of Trustees so appointed under the supervision of the Commission is responsible for allocating these funds to the host communities, utilizing a matrix defined by the ‘settlor’ of the trust.
Having stated the above, we shall proceed to examine the present standing of the PIA and the HCDT in today’s world.
Exploring Host Community Development Initiatives in Present-Day Nigeria
In present-day Nigeria, a distinct and significant transformation is occurring within the realm of host community development. The rise of Host Community Development Initiatives stands as clear evidence of the changing dynamics in resource-rich areas.
This exploration delves into recent advancements made by these initiatives, shedding light on their notable achievements in effectively addressing the critical needs of host communities. By carefully assessing the extent to which these communities’ requirements have been fulfilled, we gain valuable insights into the evolving landscape of development and the complex interplay between industries, governing bodies, and the genuine aspirations of these communities.
The progression of host community rights within the framework of the Petroleum Industry Act (PIA) has led certain communities to embark on establishing their own host community development trust. An example of this initiative is evident in the endeavors of the residents of Ugborodo, Ijala, Ogidigbe, and Emadaho communities in the Niger Delta. This collective effort culminated in a unanimous decision to establish the “Ikpere Community Host Community Development Trust.”
On the 26th of May 2023, the communities of Ugborodo, Ijala, Ogidigbe, and Emadaho, located in the Warri South West Council area of Delta State, congregated at the Chevron Nigeria Limited facility. During this assembly, they articulated demands for their inclusion in the provisions of the Petroleum Industry Act, job opportunities for local inhabitants, and a forum for addressing welfare-related matters. The leaders of these five communities united in consensus to draft legislation for their distinct PIA and trust, differentiating it from those of other regions within the Itshekiri land. This initiative, christened the “Ikpere Community Host Community Development Trust,” led them to issue a seven-day ultimatum to Shell to engage in discussions regarding the implementation of the trust fund. Public demonstrations were also organized against entities such as Chevron and Shell, underlining their grievances.
In summary, the grassroots efforts of communities such as Ugborodo, Ijala, Ogidigbe, and Emadaho in establishing their own host community development trust reflect a growing trend within the framework of the Petroleum Industry Act (PIA). Their collective initiative, exemplified by the “Ikpere Community Host Community Development Trust,” underscores the importance of local engagement and empowerment in resource-rich regions.
In addition, the Nigerian Upstream Petroleum Regulatory Commission (NURPC) introduced an innovative digital platform for reporting and monitoring host community development trust activities in the wake of political deliberations within the National Assembly in May 2023. This technology was conceived to enhance transparency in fund utilization for community maintenance and as a channel for supervising host community development initiatives. The NURPC as at the date of this publication, successfully sanctioned 75 host community development trusts, of which 41 have been formally incorporated through the Corporate Affairs Commission.
Moreover, the introduction of a digital platform by the Nigerian Upstream Petroleum Regulatory Commission (NURPC) to monitor and ensure transparency in host community development initiatives demonstrates a proactive step towards effective governance and accountability. This technological approach aligns with broader national goals and regulations.
Meanwhile, in June 2023, the Shell Petroleum Development Company unveiled eight Host Community Development Trusts in Bayelsa State. This move is a pivotal stride towards accessing the allocated $56million (United States Dollars) designated for development in alignment with the PIA. Stakeholders, including the state government, regulatory bodies, partners, and local communities, commended Shell for establishing these trusts as a significant industry landmark.
In another significant development, Shell’s unveiling of multiple Host Community Development Trusts in Bayelsa State marks a milestone in the utilization of funds designated for development under the Petroleum Industry Act. This move not only fosters collaboration between industry players, regulatory bodies, and local communities but also emphasizes the industry’s commitment to sustainable development within the host regions.
Beyond the legislative implications of the PIA, the Nigerian Content Development Monitoring Board (NCDMB) spotlighted their dedication to research and innovation as catalysts for promoting local content development in Nigeria during the 2nd NCDMB Research and Development Fair and Conference in 2022. Patrick Obah, the Director of Planning, Research, and Statistics at NCDMB, reiterated their commitment to providing essential institutional support in this regard.
The NCDMB’s dedication to research and innovation as drivers of local content development highlights a broader commitment to advancing Nigeria’s position in the petroleum sector. Through events like the NCDMB Research and Development Fair and Conference, stakeholders are actively fostering an environment that encourages innovation and knowledge-sharing, which is essential for the sector’s(including the oil and gas sector) growth and the nation’s progress boosting local content.
In conclusion, these initiatives collectively underline the evolving landscape of the petroleum industry in Nigeria, where community-driven efforts, regulatory innovations, and industry collaborations are reshaping the way the sector operates. As the nation navigates the implementation of the Petroleum Industry Act, such developments are pivotal in ensuring a more inclusive, transparent, and sustainable future for both the host communities and the industry as a whole.
CONCLUSION
In the context of Nigeria’s reliance on natural resources, particularly in the oil and gas sector, host community rights have gained significant attention. The exploration and extraction of these resources often intersect with communities’ land, prompting concerns about their rights and well-being. Over time, the Nigerian government has enacted laws to address these concerns, with the Petroleum Industry Act (PIA) being a significant milestone.
The PIA introduces a comprehensive framework, including the establishment of the Host Community Development Trust Fund, aimed at fostering equitable development. Recent developments highlight the active role of communities like Ugborodo, Ijala, Ogidigbe, and Emadaho in forming their own development trusts, emphasizing local engagement and empowerment.
Regulatory bodies like the Nigerian Upstream Petroleum Regulatory Commission (NURPC) contribute to transparency through digital platforms, while industry players such as Shell’s unveiling of Host Community Development Trusts underscore the sector’s commitment to sustainable growth.
In parallel, the Nigerian Content Development Monitoring Board (NCDMB) promotes innovation and local content, reinforcing the holistic approach to industry progress.
In conclusion, the journey of host community rights in Nigeria signifies evolving awareness, collaborative efforts, and responsive governance. As host community rights remain a priority, the nation is navigating towards more inclusive, transparent, and sustainable operations, finding the balance between economic advancement and community well-being.
REFERENCES
Overview of the New Petroleum Industry Act 2021. (2021, August 6). Mondaq. https://www.mondaq.com/nigeria/oil-gas–electricity/1113104/overview-of-the-new-petroleum-industry-act-2021 (last reviewed 14th, August 2023)
Section 235(2), Petroleum Industry Act 2021
TVC news Nigeria (2023, May). NUPRC Unveils Digital Platform For Host Community Development [Video]. YouTube https://youtu.be/dw_fltcK8Mk
Fresh Angle International (2023, May). PIA: Ugborodo creates Ikpere Host Community Development Trust [Video]. https://youtu.be/F94tbVNUlxQ
SOUQ NEWS (2023, May). Shell Petroleum Development Company recently unveiled eight Host Community [Video]. https://youtu.be/y8paYwgpudY
Arise news (2023, May) NCDMB interacts with host communities – arise news report
. Youtube https://youtu.be/yOG1IVbB9Jk