Enhancing Community Participation and Environmental Protection in the Petroleum Industry Bill

Environmental degradation and inequality in allocation of resource benefits have been at the root of insurgency in the Niger Delta. While multiple groups have emerged to protest perceived inadequacies and injustices created by the structural and institutional imbalances, the introduction of the Petroleum Industry Bill (PIB) represents an important opportunity for addressing the massive environmental devastation and improve community participation in oil exploration in the Niger Delta.

Among several pioneering provisions, the Bill’s establishment of the Petroleum Host Communities’ Fund (PHC Fund) has been widely applauded and perceived as a strategic response for addressing the continued local discontent and instability in the Delta.  Under Section 118 of the bill, every company that is involved in oil and gas exploration and production is required to remit into the fund on a monthly basis, 10 per cent of its net profit, which the reform bill defined as the adjusted profit minus the Nigerian hydrocarbon tax and minus the companies’ income tax.  In addition to the benefits of involving the oil-producing communities in the joint ownership of oil and gas assets, the Fund will be utilized for the development of the economic and social infrastructure in oil-producing communities. 

Thus far, parliamentary deliberations on the PIB reveal that the PHC Fund, and other provisions related to community development and environmental sustainability have been subjects of intense controversy among Nigerian lawmakers, especially those from the northern part of the country. Largely described as unfair, critics allege that the PHC Fund, including a plethora of similar development interventions specifically targeted at oil producing states confer undue economic advantage on the Niger Delta region, to the detriment of other less-endowed states.  On the other hand, international oil companies operating in Nigeria have criticised the fiscal provisions of the reform bill.

This brewing controversy is reminiscent of the previous setbacks that stalled the major legislative attempt to have the petroleum legislation PIB passed in 2009. Averting a repeat of the 2009 slow-down requires intense citizen engagement to avoid ‘politicisation’ and “capture” of the legislative processes. 

With this in mind, Spaces for Change (S4C), with support from the Open Society Initiative for West Africa (OSIWA) is implementing the Oil Sector Legislative Engagement and Accountability Project to create spaces for major stakeholders to engage with environment and community participation provisions in the new draft PIB. It will help to mobilize and organize the voices of key stakeholders to monitor and ensure that major demands by oil producing communities and other stakeholders for environmental protection and community participation are adequately addressed in the new PIB. 

In line with the above, S4C is convening a one-day roundtable, on January 22, 2012 to facilitate stakeholder engagement and discussions of the relevant sections on community participation and environmental protection (CPE) in the draft PIB. In an informal setting, the roundtable participants will begin the groundwork and map out a strategy for launching and driving the advocacy on the CPE provisions of the PIB.  Among other outcomes, a Core Advocacy Group (CAG) will emerge from this interactive activity with a mandate to monitor, review and recommend actions throughout the legislative process.