PIB: CSOs Fault 2.5% Proposed Fund for Host Communities

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By Chineme Okafor

Civil Society Organisations (CSOs) working within the advocacy space of Nigeria’s extractive sectors have argued that the proposed 2.5 per cent off the operational expenditure of oil companies operating in the Niger Delta for host communities in the Petroleum Industry Bill (PIB) was too low.

The CSOs thus asked the National Assembly to consider raising the amount to 10 per cent of the operational expenditures of the oil companies. They explained that this could represent a middle ground in the ongoing debates for host communities’ trust fund in the PIB.

The PIB, a piece of legislation expected to rewrite the laws and reposition operations in Nigeria’s oil and gas industry has being in the works for many years, but the National Assembly has resumed legislation on it, with concerns on how to adequately accommodate communities hosting oil operations top on the agenda.

However, from a recent meeting organised by the Order Paper and UK-backed Facility for Oil Sector Transformation (FOSTER), the CSOs noted that the 10 per cent proposed, “is a middle ground position taken after vigorous and exhaustive debate on the concerns of companies, government and the peculiar nature of the development challenges facing current oil-producing areas and places newly discovered for production.”

They further explained that, “the debate was anchored on a calculated materiality threshold of both the prescribed and recommended percentages of operational expenses,” adding that the advocacy, “is anchored on the fact that all jurisdictions with oil-producing communities have one form of beneficiation mechanism or another to compensate the hosts.”

They also noted that the proposal in the PIB on community ownership of development choices plans and delivery should be reviewed, adding that the bill as currently framed, farms out the ownership, design and vehicle for development of oil-producing areas.
“The proposed Host Community Development Trusts – substantially to companies; this is a recipe for disaster and defeats the objectives intended to be achieved by the PIB,” they said.

Furthermore, they stated that the responsibility for security of petroleum assets as proposed in the PIB is vested on host communities, but described this as being “escapist, defeatist and laden with the potential for scapegoating and vendetta.”

Additionally, the CSOs asked that the bill explicitly define the term host community to clear potential ambiguities. According to them, the failure of the bill to clearly define what constitutes and who defines a host community was a dangerous latitude that could be exploited for crisis-mongering.

On harmonisation of environmental regulations, they noted that all environmental issues including audit, regulation, and remediation should be ceded to the ministry of environment to avoid potential policy and regulatory overlaps.

“Nigeria must be positioned to earn more revenue from a fiscally responsible framework to guide the petroleum sector. Companies and operators should be entitled to decent Returns on Investment (ROIs) to encourage current and fresh investments and by extension, the growth and development of the industry.

“Job security and decency of labour for workers in the industry must be guaranteed in the transition to a post-PIB regulatory regime. Gender dimensions and mainstreaming must be taken into account in the framing and operationalisation of the proposed law. The PIB must look out for the interests of the unborn and entrench a befitting saving scheme for the future,” the CSOs further advocated.