AL, which made this demand in a statement issued on Thursday, titled: "Urgent Action Needed for the Optimal Implementation of the Petroleum Industry Act (PIA) in the Oil-Producing Communities in the Niger-Delta," said that community leaders and stakeholders in oil-producing communities in Akwa Ibom, Delta, and Rivers States had raised concerns over the implementation of the provisions of the PIA, such as the Host Community Development Trust (HCDT) and the Environmental Remediation Funds.
The Accountability Lab (AL) Nigeria, a global network, has called on the President Bola Tinubu-led Nigerian government to prioritise the implementation of the Petroleum Industry Act (PIA) provisions in the oil-producing communities in the Niger-Delta.
AL, which made this demand in a statement issued on Thursday, titled: "Urgent Action Needed for the Optimal Implementation of the Petroleum Industry Act (PIA) in the Oil-Producing Communities in the Niger-Delta," said that community leaders and stakeholders in oil-producing communities in Akwa Ibom, Delta, and Rivers States had raised concerns over the implementation of the provisions of the PIA, such as the Host Community Development Trust (HCDT) and the Environmental Remediation Funds.
In the statement signed by Country Director, Odeh Friday, said that the PIA which came into force in August 2021, 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, the statement noted, aims to foster 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.
"Nine communities in Delta, Akwa Ibom, and Rivers States face severe concerns regarding implementing the PIA and the HCDT Fund," the statement noted citing the work of Accountability Lab Nigeria in the region.
The group which highlighted critical issues impeding the optimal implementation of PIA to the benefit of the host communities, urged oil companies, the federal government, the Nigeria National Petroleum Company (NNPC) Upstream Investment Management Services (NUIMS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to act immediately.
The critical issues identified include: "Lack of Transparency and Poor Community Engagement, Conflicts of Interest, Inadequate Needs Assessments and Community Development Plan (CDP), Operating Expenditure and Fund Allocation, Environmental Concerns and Underutilization of Gas Flaring Penalties."
According to the statement, several communities during the cause of work of AL, reported diverse voices being excluded, including women, youth, and people with disabilities, 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," he noted.
On the issue of conflicts of interest, the group stated that in some cases, oil companies have chosen to work with benefit captors; in other cases, traditional rulers, who 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."
Contrary to Section 251(4) of the PIA which mandates a needs assessment before establishing HCDT, the group said that some community members reported 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.
On the Operating Expenditure and Fund Allocation, the AL statement noted that some communities do not know oil companies’ operating expenses in the Niger Delta, making it difficult to verify 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."
It also noted that there was evidence from the communities which suggests companies may be under-reporting gas flaring, resulting in lower penalty payments and reduced funds for environmental restoration. "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," the statement revealed.
In line with Nigeria's commitment to the Open Government principles, AL Nigeria, appealed to "Oil companies, NUIMS, and NUPRC to
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; Investigate potential breaches of the PIA and 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; Conduct proper needs assessments, involve diverse community stakeholders in all HCDT processes, and ensure it is publicly accessible."