What is a host community? Who and who should benefit from the 10 per cent of all oil and gas earnings reserved for the oil producing areas through the Petroleum Host Community Fund (PHC) created by the new Petroleum Industry Bill (PIB)? What features should a community have to earn the title of a “host community”? In what way(s) would the Fund benefit the host communities?
These questions and many more dominated discussions at a consultative roundtable on the PIB organized by Spaces for Change, a Lagos-based public policy and advocacy organization. Participants comprised mainly of civil society leaders, oil and gas experts, legal practitioners, energy correspondents, former senior executives of international oil companies and representatives of oil producing communities. Diverse stakeholders’ concerns about the PHC Fund provoked heated debates, strong arguments and counter-arguments for and against the establishment of the Fund.
Leading the opposition to the fund’s establishment are northern lawmakers who insist the Niger Delta region of Nigeria is already benefitting from a plethora of official interventions aimed at facilitating the rapid and sustainable development of the region. Critics says that “an additional 10 per cent for oil producing states was one revenue stream too many as such states already enjoyed seven other special sources”.
Disagreeing so strongly with the northern position on the PHC Fund, Dr. Bala Zakka, an energy expert who has worked for oil majors like Shell for decades asked rhetorically,” If they oppose PHC Fund today, what would they do if oil is discovered in Borno and Sokoto tomorrow? Would they ask for the amendment of the PIB? Or start a new agitation against regional marginalization?” The PIB is not about giving money to the Niger Delta, but about opening up the economy to opportunities that will benefit all the regions and all Nigerians.
In his lead paper at the roundtable, Dr. Zakka, who is himself a northerner from Borno State, believes that “the current PIB cannot become a law without selfless sacrifices, shifting of grounds, tolerant and accommodation of uncoordinated logics and sometimes, disgusting philosophies”. He is not the only one that thinks that no amount of initiative, no percentage of oil revenue earnings is too high to be set aside for the areas that bear the brunt of oil exploration and production. Public affairs analyst and oil and gas legal expert, Mr. Ikechukwu Ikeji argues that opposition to the PHC Fund is divisive and politically motivated. “The PHC Fund should be retained considering the level of devastation endured by oil-bearing communities”, he says.
Detailing the woes of oil-bearing communities, Celestine Akpobari, Head, Social Development Integrated Centre (Social Action), Port Harcourt Rivers State revealed that people drink water coated with as much as 8cm of oil in the Niger Delta. Most water wells are polluted. In Ogoni land for instance, there are weekly funerals of local residents dying of unknown causes. The only electricity in most of the Niger Delta communities at night are gas flares from oil installation sites nearby.
Although he is an Ogoni man who lives and works in the Niger Delta, Akpobari embraces the position of northern lawmakers because the allocations of billions of petrodollars to the Niger Delta states have failed to achieve the goal of transforming the region, but rather, fattened the private pockets of a few self-styled “leaders of the region”. The unprecedented corruption, the total dearth of transparency and accountability in the management of regional initiatives like the Niger Delta Development Commission (NDDC) make it unnecessary to develop new initiatives that would go down the same way as its predecessors. Akpobari strongly doubts that the 10 percent reserved for oil producing areas will ever trickle down to the devastated poor communities, but would rather, provide a conduit pipe for thieving politicians to fatten their already-exploding bank accounts.
Another Niger Delta energy analyst who has also participated in the design of several Niger Delta-focused initiatives such as the Amnesty program, Professor Aiyegbeni A.A. Omonhinmin agrees with Celestine Akpobari. According to him, the PHC Fund, as currently constituted would pave way for a fratricidal war in the Niger Delta. Aiyegbeni warns that unless the structure the Fund would take is better clarified, and loopholes for embezzling funds are plugged, any new initiative designed for the benefit of Niger Delta communities is a total waste of time. He advocated for a Fund that empowers the oil producing communities rather than a Fund that presents a fertile ground for more intense hostilities between communities. One way for the Fund to achieve the goal of empowerment is by turning into an Equity Participation Fund that allows named “host communities” to draw from, or take revolving loans from the Fund for specific social and economic development projects.
That suggestion from Sir Aiyegbeni redirected the discussion back to the question: What is a host community? Of the several definitions attempted by participants, three of them provoked further debates and even more heated engagement. Pamela Braide, a communication specialist who was also involved in the implementation of the Niger Delta Amnesty Program defined a host community as a community where the oil is extracted from, and houses the facilities for the exploration and extraction of oil. Joy Eke, the senior advocacy officer of the Legal Research and Resource Documentation Center (LRRDC), Lagos, took a different view. She defined it to mean a community that is impoverished as a result of exploration of petroleum products. The petroleum companies and facilities may not be resident in that community, but they are affected by the activities of the company and of those facilities.
That definition by Joy Eke drew fire from various quarters. By that definition, Bala Zakka explained that communities in Ejigbo Lagos, and Ilorin who have pipelines criss-crossing their backyard can lay claim to being host communities even though they have no drop of oil underneath their soil. In fact, that definition makes more than half of Nigeria “host communities”.
Sir Aiyegbeni’s definition was more technologically compliant. He defined a host community as a community and a contingent community where extraction of hydrocarbon takes place. With that definition, the discussions forayed into the technological advancements in drilling operations which enable oil companies to drill oil from a location that is far off from where the resource is anchored. “Horizontal drilling offers more targeted access to oil wells and reserves under places oil operators might not want to disturb, such as a town, forest or venerated local shrines”, Dr. Zakka explained.
Claims that Shell is currently using the horizontal technology to continue its drilling operations in Ogoni provoked another debate about Shell’s activities in the Niger Delta as well as the impacts the horizontal drilling technology would have on host communities. It was perceived that such high-profile technological interventions would make the PHC Fund meaningless in the nearest future. If such technological innovations remain unchecked, it would soon be practically difficult to ascertain which community fits the description of host community, and which community should be accorded priority on the PHC benefit scheme.
Despite the flurry of sharply-contrasting opinions and stimulating discussions about the PHC Fund, participants agreed on one basic fact: that communities deserve a special attention, at least for the sake of the raw deal they endure as a direct result of oil exploration and production activities. The structure and character of the attention to be given to communities is what needs to be worked out. It also became clearer why the drafters of the PIB deliberately ignored that conversation about the administrative structure of the PHC Fund. Obviously, that omission was deliberate due to the complex and extremely sensitive nature of both inter-community and oil company/community relationships, including the powerful confluence of forces that would be wangled through to achieve a compromise.
The organisers of the roundtable, Spaces for Change knew that forging a consensus on an issue, especially a complex issue like the PHC Fund would be an uphill struggle. The organization believes that locating common grounds on specific provisions in the PIB is a starting point towards the goal of galvanizing stakeholder support for the passage of the Bill. In this connection, participants unanimously adopted Pamela Braide’s motion that all criticisms against the PIB should be welcomed with an open mind, and that a bi-partisan approach should be adopted in negotiating the interests of different stakeholders in the PIB.
In unison, participants rejected the discretionary powers of the president to grant oil licenses, recommending that that provision should be expunged from the bill. Likewise, the discretionary-permit granting for gas flares by the petroleum minister was roundly rejected, and should be expunged from the reform bill. There was not a single person in the room that didn’t agree that the powers of the minister under the PIB need to be revisited. A strategic and sustained awareness creation on the PIB, including the sensitization of oil producing communities about specific provisions of the Bill that would potentially impact on their welfare was another resolution that received overwhelming support by participants.
A PIB Campaign Action Group, comprised of civil society leaders, industry experts, researchers, community advocates, policy analysts and media representatives, was constituted during the discussions, with a mandate to begin the groundwork and map out a strategy for driving a cohesive multi-stakeholder advocacy on the CPE provisions of the PIB. Going forward, the Action Group will work together to implement the roundtable resolutions; monitor, review and recommend advocacy actions throughout the legislative process. The roundtable was supported by the Open Society Initiative for West Africa.