In an ongoing effort to strengthen legislators’ understanding of crucial issues concerning the divestment by international oil companies and host community development trusts, SDN organised a two-day retreat in Uyo, Akwa-Ibom State. This retreat brought together members of the National Assembly–, including the House of Representatives Joint Committees on Host Communities and Environment – for a comprehensive training session. The training was aimed at updating the legislators on the progress with the implementation of Host Community Development Trusts (HCDTs), addressing grey areas within chapter three of the Petroleum Industry Act (PIA) 2021, and the provisions of the HCDT Regulations, as issued by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The retreat was attended by ranking members of the National Assembly including the committee chairmen and their deputies. Notably, the Chairman House Committee on Host Communities, Rt. Hon. Dumnamene Dekor, the Chairman House Committee on Environment, Rt. Hon. Julius Pondi, the Clerk of the Senate Committee on Environment (representing the Senate committee chairman on the environment), and the Speaker of the Akwa-Ibom State House of Assembly represented by Rt Hon Elder Jerry Anson Otu were in attendance.
The retreat featured presentations covering critical topics such as divestment in the oil and gas sector, its implications, and the need to establish an appropriate legal framework for a responsible process of divestment in the oil and gas sector. SDN’s presentation brought to light some problems identified with the current situation, including toxic legacies, unfit infrastructure, the high risk of further environmental damage, reduced opportunities for justice, and the expertise of Domestic Oil Companies (DOCs) that are taking over. It was based on our extensive research on the topic, including the work that led to the National Principles for Responsible Oil Industry Divestment, which were developed by SDN and a number of other CSO groups.
Additionally, attendees benefitted from insights from the ‘Practical Approaches for the Effective Implementation of Host Communities Development Trusts’ — a handbook developed by SDN. The Handbook provides a step-by-step guide for host community members and other stakeholders to understand HCDT implementation, highlights grey areas within the NUPRC regulations and the PIA that need urgent legislative reviews, and offers recommendations that can be adopted by all stakeholders including the oil and gas companies, the host communities, and the government to support the effective implementation of the HCDT.
Through focused working group discussions, legislators discussed the intricacies of divestment and HCDTs. The resulting resolutions reflected a commitment to legislative action and proactive measures. On divestment, motions were proposed to scrutinise recent deals and amend existing legislation to ensure transparency and accountability. Similarly, resolutions regarding HCDTs emphasised the urgency of timely implementation, fair allocation of resources, and enhanced community engagement.
The key resolutions are as follows:
- A motion to halt the divestment in the oil and gas sector pending the investigation of recent divestment deals to determine whether they align with international best practices.
- A motion for the amendment of the PIA to include provisions that support a transparent divestment process with SDN providing technical support.
- The need for SDN to provide the committees with more facts to show that it is more efficient to have the environmental responsibility of divestment deals in the hands of the host communities.
- The Committee on Host Communities to review and move a motion to amend Section 236 of the Host Communities Development Trust (HCDT) provisions to incorporate penalties for oil and gas companies that intentionally delay the establishment of HCDTs.
- The Committee will establish a standardised process for allocating the 3% derivative across all Host Communities Development Trust (HCDT) communities.
- The Committee will ensure the Boards of Trustees (BoTs) of the Trust Submit mid-year and yearly reports to the leadership of the communities.
- The Committee will mandate oil and gas companies, utilising a review and amendment of the HCDT and other legislative measures. This mandate aims to impose penalties on companies that fail to deliver their contributions to the Trusts promptly, except otherwise, the delay caused by the community.
- The Committee will initiate an amendment that proposes the allocation of 1% of the administrative fund of the Trust to be specifically designated for the functions and responsibilities of the advisory committee
- The Committee will assume the responsibility of reviewing the NEITI (Nigeria Extractive Industries Transparency Initiative) Audit Report and the Operational Expenditure (OPEX) published by oil and gas companies, enforcing penalties against companies that default in declaring their genuine OPEX, as indicated in the NEITI Audit report.
- The Committee will review and amend Section 257 (2), proposing an alternative provision that ensures community ownership, facilitates effective investigation of the causes of oil facility damage, and shields the community from bearing the financial burden of damages for which they are not responsible.
Speaking about these key resolutions, Prof Essiet Etimbuk Akpan reinforces that, “the Senate Committee on Environment will cooperate with the respective committees in both chambers to ensure divestment is done according to the law. The 17 principles for responsible oil industry divestment is a good development”.
It is expected that the legislators will utilise the knowledge gained to enhance their capacity to strengthen the legal framework for responsible divestment in the oil and gas sector. It is hoped that the resolutions reached during the retreat will be implemented to ensure that oil and gas divestment is done transparently and responsibly, while also ensuring that the host communities benefit from the proceeds of the industry.
