On October 7-8, 2024, Spaces for Change | S4C and the Federal House of Representatives’ Committee on Host Communities, with support from the Ford Foundation, organized a two-day Technical Session centered on the operationalization of Host Community Development Trusts (HCDTs) through the 3% Operating Expenditure (OPEX) allocation mandated by Nigeria’s Petroleum Industry Act (PIA) of 2021. This gathering provided a platform for stakeholders—including federal lawmakers, representatives of oil-producing communities, traditional rulers, HCDT leaders, oil company executives, civil society and independent experts—to discuss the progress and challenges in administering the 3% Opex funds across the Niger Delta. Enacted in August 2021, the PIA establishes the HCDT to promote sustained prosperity, deliver direct social and economic benefits, and foster harmonious relations between petroleum companies and their host communities. The House Committee on Host Communities oversees this process to ensure compliance with laws and policies that protect the rights and interests of Nigeria’s petroleum host communities.
The PIA’s 3% OPEX provision has potential to transform the social and economic landscapes of oil-producing regions if managed transparently and in alignment with community needs. The opening statements by both S4C’s executive director and Chair of the House Committee on Host Communities underscored the need for clear formulas for determining what constitutes 3% accruable to the HCDTs in order to ensure accuracy and accountability for the remittances made by corporations. It is against this backdrop that the House Committee partnered with S4C to assess the extent oil companies and regulatory bodies are upholding their obligations to remit these funds to their host communities for development.
The Technical Session kicked off with an expert presentation unpacking the assumptions, approximations and apportionment of 3% Opex funding. The presentation delved into the meaning of resource control and the revenue derivation in Nigeria rooted in the recognition that oil-producing regions are entitled to a portion of revenues derived from the natural resources extracted from their lands. It also shed light on oil production trends globally and locally; Nigeria’s legal frameworks governing the ownership and use of mineral oils; and the challenges host communities face such as widespread poverty, , social unrest, unemployment, environmental degradation from spills and gas flaring, distorted social dynamics, corruption, and perceived federal neglect. These trends have fueled largescale local discontent and violent agitations. A crucial part of the presentation focused on the determinants of 3% OPEX which include all direct lifting costs, the companies’ administrative expenses, interest expenses and other costs.
During the first session, HCDT community representatives from Rivers, Imo, Akwa Ibom, Abia, Bayelsa, Delta, and Anambra States shared firsthand accounts of the extent petroleum companies have remitted 3% of their Opex to the HCDTs. These insights painted a mixed picture of performance and under-performance. While some communities reported successful collaborations with oil companies, some others expressed frustration over delayed or absent HCDTs despite years of hosting oil operations. The next session featured responses from the representatives of international oil companies regarding the status of their remittances to the HCDTs. They outlined efforts to ensure compliance with PIA provisions and managing the funds transparently amid challenges, including procedural delays within communities that hinder timely project execution.
Key recommendations from the Technical Session include enhancing HCDT fund coordination and transparency; standardizing Host Community Fund principles across other mineral resources in Nigeria to ensure fair and sustainable development nationwide; encouraging stronger collaboration between agencies implementing similar community development initiatives like the Niger Delta Development Commission (NDDC), Niger Delta Ministry, and other state interventions to prevent project overlap and maximize resource efficiency.
This Technical Session set a constructive course for addressing HCDT challenges, reinforcing the collaborative framework necessary to secure meaningful and lasting progress for host communities in the Niger Delta. The two-day discussions underscored the need for enhanced community participation, clear governance structures, and transparent accounting practices to safeguard the integrity of the 3% OPEX funding. The Chair of the House Committee on Communities concluded by pledging the Committee’s continued oversight, emphasizing that this funding represents a significant opportunity for sustainable development in the underdeveloped oil-rich communities.
