Accountability Lab (AL) Nigeria, in collaboration with community leaders and stakeholders, raises pressing concerns regarding the implementation of the PIA’s provisions, such as the Host Community Development Trust (HCDT) and the Environmental Remediation Funds, in the best interest of oil-producing communities in Akwa Ibom, Delta, and Rivers States.

The PIA came into force in August 2021 and has allowed the incorporation of the HCDT in oil and gas-producing communities to replace the Community Development Committee (CDC) Global Memorandum of Understanding (GMoU). According to Section 240(2) of the PIA, the oil/gas company must make an annual contribution to the HCDT Fund equal to 3% of the company’s actual annual operating expenditure for the preceding financial year.

The HCDT aims to advance sustainable prosperity by providing direct social and economic benefits to the host communities from petroleum operations, among other benefits. This implies that the benefits of oil and gas operations in host communities should go directly to the oil-producing communities, unlike the 13% derivation through the state government.

According to AL Nigeria’s work in the region, nine Delta, Akwa Ibom, and Rivers States communities need more attention regarding implementing the PIA and the HCDT Fund. This communiqué highlights critical issues and urges oil companies, the Federal Government, the House of Representatives Committee on Host Communities, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), NNPC Upstream Investment Management Services (NUIMS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to act immediately.

Lack of Transparency and Poor Community Engagement:

1. Non-inclusive Nomination Process: Several communities, including women, youth, and people with disabilities, reported that diverse voices were excluded from the HCDT Boards. Section 12(4) of the Nigerian Upstream Petroleum Host Communities Development Regulation (2022) provides that due consideration must be given to diversity as it relates to age, gender, and physical disability in determining the criteria for appointment to the Board of Trustees. This contradicts the principles outlined in the Nigerian Upstream Petroleum Host Communities Development Regulation (2022), the PIA, and raises questions about equitable representation and the legitimacy of the HCDT;
2. Conflicts of Interest: In some cases, oil companies have chosen to work with benefit captors; in other cases, traditional rulers allegedly misused their influence to make unilateral decisions in the HCDT process, bypassing proper consultation.  Concerns also exist about individuals close to oil companies holding positions in the HCDT, raising questions about fair decision-making and potential conflicts of interest;
3. Inadequate Needs Assessments and Community Development Plan (CDP): Section 251(4) of the PIA mandates a needs assessment before establishing HCDT. Some community members report that a need assessment was never done, nor were they ever consulted to develop their CDPs, potentially leading to projects that must address their priorities;
4. Operating Expenditure and Fund Allocation: Some communities do not know oil companies’ operating expenses in the Niger Delta, making it difficult to verify/ validate the accuracy of their 3% contributions to the HCDT Fund. There is a huge information gap between those nominated and inaugurated in the HCDT and stakeholders over the processes involved in the HCDT. This lack of transparency breeds mistrust and hinders effective development.

Environmental Concerns:

1. Under-reported Gas Flaring: Evidence from the communities suggests companies may be under-reporting gas flaring, resulting in lower penalty payments and reduced funds for environmental restoration;
2. Underutilization of Gas Flaring Penalties: Section 104(4) of the PIA provides that money from gas flaring penalties by the NUPRC be used for environmental remediation and relief of the host communities of the settlors on which the fines are levied. Funds paid to NUPRC since 2021 are yet to be used for environmental remediation in affected communities.

AL Nigeria urges the following actions in line with Nigeria’s commitment to Open Government principles:

1. Oil companies, the House of Representatives Committee on Host Communities, NMDPRA, NUIMS, and NUPRC:
   1. Ensure transparency by publicly and proactively disclosing the operating expenditures of oil companies, HCDT fund allocations, and HCDT’s Operations, thereby facilitating compliance with the PIA and its regulations;
   2. Investigate potential breaches of the PIA regulations and enforce compliance. NUPRC and oil companies should disclose and utilize gas flaring penalties for environmental remediation in line with Section 104(4) of the PIA;
   3. Conduct proper needs assessments, involve diverse community stakeholders in all HCDT processes, and ensure it is publicly and openly accessible;
2. Community Awareness: Advocate for community awareness programs to understand the PIA provisions/ benefits, hold authorities accountable, and enable community members to engage in HCDT processes actively;
3. Media and CSOs: Investigate and report on the communities’ concerns, raise public awareness, and hold stakeholders accountable for transparent implementation of the PIA and a collaborative approach to environmental and social issues;
4. In tandem with the concerns raised about the HCDT and Environmental Remediation Funds, it is crucial to consider the broader context of human rights within business operations. The National Action Plan on Business and Human Rights is an essential policy framework that encapsulates the pillars of protection, respect, and remedy, emphasizing the duty of states to safeguard against human rights abuses, the responsibility of oil companies to respect human rights, and the necessity for accessible remedies for affected communities.

AL Nigeria seeks to improve governance through accountability, inclusion, and community empowerment. We call upon relevant stakeholders to address these concerns promptly for the benefit of the affected communities and the sustainable development of the Niger Delta. By addressing these concerns and taking concrete action, the PIA will deliver its promised benefits to the Niger Delta communities and promote environmental justice.

Odeh Friday
Country Director