PIGB: How to achieve sustainable peace, inclusive growth in oil communities

National Assembly
National Assembly

As assent to the Petroleum Industry Governance Bill (PIGB) by President Muhammadu Buhari is still pending while a proposal is currently being worked on a Revenue Management Bill to help attain sustainable peace and inclusive growth in the Niger Delta region.

Despite various intervention efforts by the federal government to give the oil producing communities in the region a sense of belonging, the heightened restiveness from the people appears to strengthen concerns the impact is not reaching the target.

A former Director, Department of Petroleum Resources (DPR), Osten Olorunsola, said the proposed bill will seek to harmonise all revenues meant for the region’s development currently under different sub-heads under a single management law.

Apart from the 13 per cent derivation revenue paid to the oil producing states under Section 162(2) of the Constitution, another 15 per cent of total statutory allocations to member states of the region is set aside for funding of the Niger Delta Development Commission (NDDC).

Also, three per cent of the total annual budget of all oil companies operating in the Niger Delta, along with 50 per cent of revenues due to all NDDC States from the Ministry of Niger Delta are designed to cater for the development of communities in the oil producing region.

Then, the Amnesty Programme was established to assuage the concerns of restive youth of the region, apart from respective oil companies’ corporate social responsibility (CSR) activities.

Mr Olorunsola, who spoke at a roundtable on the petroleum industry law in Abuja, said indigenes of the region have blamed the inadequate impact of these interventions on a skewed arrangement vesting the management of the various revenues in the hands of different agencies and authorities.

“There are concerns in the industry on the need for the management of all these revenues to be brought under a single legal umbrella for adequate and proper impact coordination and monitoring. This is the essence of the proposed Revenue Management Bill,” Mr Olorunsola explained.

The roundtable was organised by the Nigerian Natural Resource Charter (NNRC) in conjunction with the Media Initiative on Transparency in Extractive Industries (MITEI), a media advocacy coalition on the PIB.

Oil Communities’ Concerns

The National Coordinator, Spaces for Change, Victoria Ibezim-Ohaeri, said although the Petroleum Host and Impacted Communities Bill (PHICB) was to create a framework for direct economic benefits from petroleum operations and enhance peaceful coexistence between settlers and host communities, the reality on ground was different.

To ensure sustainable development and inclusive growth, Ms Ibezim-Ohaeri said oil companies must establish Petroleum Host Communities Development Trusts in communities they operate, with the people allowed to determine those that qualify as ‘host communities’.

Besides, the communities must be allowed to appoint the Board of Trustees (BoT) who will register the Community Trusts with the Corporate Affairs Commission, with the National Petroleum Regulatory Commission empowered to resolve disputes from the management of the Trust.

“Failure to incorporate the Trusts shall be a ground for the suspension of operating license,” she proposed.

“The Bill will create new bodies, positions and roles, including the management/ advisory committees, endowment and reserve funds and fund managers, for the administration of the community trusts.”

To guarantee ownership by the people, Ms Ibezim-Ohaeri said the communities should be empowered to constitute the Board of Trustees (BOT) by determining the criteria for appointing its members as well as approve and allocate funds for projects and provide general oversight of management.

Although trustees need not be indigenes of the host community, she said their term in office must be for four years, renewable for one additional term, with responsibilities to receive and manage the trust funds’ and decide amount allotment for each host community development.

” Membership of the management committee shall comprise a representative of each host community nominated by the host – community, who shall be a non –executive member, including Nigerians, who may not necessarily come from the host communities,” she said.

On funding, she proposed an endowment fund for the community trusts, through various funding sources, including an annual 2.5 per cent contribution from the profit after tax by the oil companies, royalties, gas flaring penalties, percentage of derivation fund, federal allocations donations, as well as grants from the states.

Areas For Reforms

For sustainability, Ms Ibezim-Ohaeri called for a review of the constitutional prescriptions for the governance structures, to make the arrangement more participatory and inclusive, apart from ensuring the oil companies contributions are increased to about 10 per cent.

Besides, clarity should be given on how the 2.5 per cent profit after tax contribution would be calculated as well as obligations between oil companies, local council authorities, communities and oil companies would be shared.

Also, she stressed the need to deepen involvement of the host communities in appointing BOT by defining criteria for management committees and their operations.


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