Last week, I started looking into the easily remedied gaps and vague provisions in the Petroleum Industry Bill (PIB) as it relates to community engagement. I had pointed out that although laudable and timely, it would be of national interest if these gaps, including a shortage of government oversight over efficient implementation and timeliness and community inclusion in decision-making, are addressed.
In continuation, and still gleaning broadly from the Host Communities Bill (HCB) of the PIB, I further underscore a number more ambiguities that the bill’s proponents could take into cognisance. In my estimation and considering Nigeria’s historical context, it would be rather unsettling if an HCB does not actually speak tackling the underlying issues relating to the agitations of communities over the years, while also protecting corporate rights and viability, of course.
Allow me to start with section 242 (2) of the HCB which states that “The Settlor shall, in the determination of membership of the Board of Trustees, include persons of high integrity and professional standing, who may not necessarily come from any of the host communities”. A critical observer would ask: Who is a “person of high integrity and professional standing”? What specifications or qualifications are needed to meet the requirements? Would this include different people regardless of age and ethnicity? This provision is very vague and would require further guidance.
Sections 235 (1) and 242 (1-5) then go further to cede power to settlors (operating companies) to decide persons who will comprise the Board of Trustees, leaving wide open the possibility of allowing individuals who lack empathy for the plight of community members to participate or lead in their governance. The oil-producing communities reject this entirely, recalling the unfriendly role of non-indigenes in local content implementation, although to be honest some indigenes have been known to be far less friendly as has been witnessed in the governance of agencies like the Niger Delta Development Commission (NDDC). And although there is a widespread view that in the face of current ethno-religious consciousness and sentiments, the inclusion of persons from other parts of the country would create doubt and suspicion that may lead to loss of confidence in the initiative, I do not totally agree with this viewpoint, because Nigeria is a nation of diverse peoples, and as it stands, our resources are for national benefit. I do recommend, however, on the basis of extensive research, that credible and expert host community indigenes must be legally given a specified percentage of representation on the Board of Trustees and the Host Community Development Trust.
Now, if we move further along onto section 242 (4) on the tenure of Board of Trustees members, the recommended two-term tenure of four years raises a valid concern for sit-tight tendencies, even in the face of incompetence, that could hinder the efficiency of the Board of Trustees and by extension the Host Community Development Trust. What then if a board or its members are found incompetent? I strongly believe that these were the considerations that CAMA (Companies and Allied Matters Act) thought through and made provision for in order to avoid the negative impact of karma, and as such, expect the regulators to properly reassess as we wind down to the release of the bill.
To be fair, the Host Community Advisory Committee (section 249 (1-3)), provides a statutory opportunity for communities to be part of decision-making on some level, with the downside being that it is strictly advisory. And I am sure that I do not need to expatiate on how limited powers of advisory bodies are.
One of the encouraging aspects of the HCB of the PIB is section 251 (1) which provides for the conduct of host community needs assessment by the company and the necessity of a Host Community Development Plan. The one thing I would add to that being that the bill should provide guidance as to exactly how companies must engage to ensure equity and avert further conflict. A favourite reference of the relevance of this bottom-top approach is the Goldman Sachs survey which points to the fact that 73% of delays in extractive business operations are due to non-technical issues such as conflict leading to the destruction of properties.
Finally, on the elephant in the room, insecurity, we see section 250 (e) expect oil-producing companies to single-handedly be responsible for first-line protection of facilities and ensuring that petroleum operations are uninterrupted by members of their community, failing which benefits from the Trust to the company will be disallowed. Granted, if an oil company has good relations with its host communities, there would be far less instances of disagreement or violence and obviously less safeguarding of lives and properties. But, what must be taken into account is the many years of disagreement and dissatisfaction that may be in existence or that companies may inherit, and that would require the strategic support of government agencies as a guiding third party, including technical agencies like the Department of Petroleum Resources and Nigerian Content Development and Monitoring Board (NCDMB)- and tactical, such as the Nigerian Security and Defense Corps (NSCDC). This is why CSR-in-Action’s CES suggests the establishment of a Joint Company-Community-Government Monitoring Team, because “there is the need to democratise the process”1. The CES goes further to explain that “[t]his body [should be] part of the governance structure of the community engagement process and could form or be a part of the [Host Community Development Trust]. This body shall be made up of selected civil society, community, company and government official members. From a peacebuilding and conflict prevention standpoint, this body is an early warning structure. If at the beginning of a CE process, clear roles and responsibilities are allocated to groups and individuals, then the stage is set for people to be accountable and resourceful”.
I will conclude by saying that although the PIB takes significant steps toward much-needed governance reform at the Nigerian National Petroleum Corporation (NNPC), and has addressed hitherto unreferenced and specific environmental and social issues, it does ignore climate change, the energy revolution, specifics around community stakeholder engagement and the itty-bitty issues that continue to bug Nigeria’s petroleum industry. As the CES forebodes, “whenever a law does not consider the interest of all the stakeholders involved, problems are bound to arise.”
Author: Bekeme Masade-Olowola